June 14, 2013 by David K. Sutton
CHART: Social Security Average Wage Index vs. CEO Total Compensation Average
The Social Security Administration computes an annual “Average Wage Index” to ensure a “worker’s future benefits reflect the general rise in the standard of living that occurred during his or her working lifetime.” This index is based on “wages subject to Federal income taxes and contributions to deferred compensation plans.”
Forbes compiled a chart (“Two Decades of CEO Pay“) that shows average CEO salary, bonus and total compensation by year.
Since the scale of these two data sets is so disparate, let’s have a little fun and chart the Social Security Average (yearly) Wage Index against the average (weekly) CEO compensation. — WARNING: This is depressing.
source: Forbes: Two Decades of CEO Pay (U.S. Bureau of Labor Statistics)
source: Social Security Administration – Average Wage Index
While the increase in CEO compensation does not chart linearly, it’s clear the rate of increase for CEO compensation is outpacing the rate of increase for the average wage index. Oh, and don’t forget, if you want to compare yearly for both data sets, those blue bars for average CEO compensation represent 1/52nd scale in this chart!
Now let’s chart the multiple. To put it in other words — How many “average wages” does it take to add up to one average CEO? — WARNING: This is going to hurt.
It’s not like we are comparing compensation between different economies or different countries at various states of economic development. This is all from one country, the United States. So are we to assume an average CEO in America is much more productive than the average American worker? Is any human being really worth that much more than the average human being?