27
May
2005
Effette Britons horrified by wage gap
Britain’s GMB union have published a report on disparities between executive pay and that of the lowest-paid employees in the country. According to GMB, executives on average are paid sixteen times what the lowest-rung workers make, with top executives averaging £162,028, or slightly less than $300,000 at current exchange rates, and the lowest-paid employees averaging about £10,400, or about $19,000.
Finding an exact comparison to the GMB survey is difficult, but it’s safe to say that the difference in pay between top executives and their employees in the US is somewhat more pronounced: According to the Economic Policy Institute, the average pay for top US executives was 185 times that of the average employee in 2003. And that was down from a ratio of 300-1 in 2000.
Executive compensation has soared over the last twenty-five years, especially in the 1990s. In contrast, the typical worker’s wage fell in the early 1990s and rose from the mid-1990s until the recent recession. From 1989 to 2000, the compensation of the average chief executive officer grew 342%. CEO compensation was lower in 2003 than in 2000, yet CEOs in major companies still earned 185 times more than the average worker, up from 71 times in 1989. This rising extravagance of executive pay is a distinctly American phenomenon: U.S. CEOs make about three times as much as their counterparts abroad.
The GMB describe the British pay gap as an “Upstairs/Downstairs” situation; ours seems more akin to an “Everest/Marianas Trench” one. The poor Brits would get nosebleed here.
Fortunately, the American worker is tougher than that. Bring on 1,000-1!
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You compared “top executives” in Britain to CEOs in the US. Be interesting to know GMB’s definition of “top executives”…otherwise your comparison isn’t too compelling. Top executives could be bank managers (hordes of those), local McDonald’s managers, VP in charge of you-name-it, etc. A CEO, on the other hand, is unambiguously the “top”.
May 28th, 2005 at 10:37 pmThe description in the GMB survey is “Directors and chief executives of major organisations,” so I think we can assume McDonald’s store managers are out of the running. I can’t find it now, but I ran across a Business Week with a chart comparing US CEO compensation with that of other developed countries. The average was, I think, 3x.
May 29th, 2005 at 12:34 pmJust read the GMB survey which refers to “Managers and Senior Officials”. Are we reading the same survey? I see no reference to “Directors and chief executives”.
May 29th, 2005 at 2:03 pmPardon! Just saw footnote 2…which kind of proves my point:
May 29th, 2005 at 2:10 pm“Managers and Senior Officials comprise senior officials in national and local government, directors and chief executives of major organisations, production managers, functional managers like in finance, marketing, advertising, personnel, research and development, communications, quality and customer care managers, transport, storage and retail and wholesale distribution managers, officers in the armed services, police and fire service etc., health and social service managers, managers in rural industries and hospitality and leisure services, property managers, garage managers, recycling and refuse disposal mangers. Please note they do not include professional occupations.” I’d put my money on the McDonalds managers. I don’t quibble with the point made by the survey…just think it’s a bit skewed. Kind of hard to compare a garage manager to the CEO of, say, Hewlett Packard.
That is a different survey. Here’s the one I’m taking from, which specifies directors and chief executives. Here’s the one you’re looking at, which includes chief executives and a whole bunch of other classifications, including government jobs.
May 29th, 2005 at 3:17 pmI read the GMB survey and I concur. There are no reference to “Directors and chief executives.
skip hire
November 26th, 2009 at 3:10 amSkip Hire: again, I refer you to this survey. The very first item is “Directors and chief executives of major organisations”.
Beneath the pay tables you will find this comment:
Is there anything unclear about that?
December 2nd, 2009 at 1:05 amThe wage gaps found in Australia are even worse. Seriously. Women are like second class citizens. Interesting read. Thanks
February 6th, 2010 at 9:40 pm“The description in the GMB survey is “Directors and chief executives of major organisations,” so I think we can assume McDonald’s store managers are out of the running. I can’t find it now, but I ran across a Business Week with a chart comparing US CEO compensation with that of other developed countries. The average was, I think, 3x.”
The actual average is now 4.5x
May 24th, 2010 at 1:48 am