Severe thunderstorm and tornado warnings issued for Twin Cities metro area

MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all. 

Turn Up Your Support

Workers of all stripes have chafed at the stratospheric pay of their CEO bosses for years, even decades.

This year, unions are calling out the pay disparity between workers and CEOs in negotiation after negotiation with management, as they demand more.

It's at the core of the United Auto Workers' messaging, as the union pushes for substantial pay raises for its roughly 150,000 members, who work at the Big Three automakers: Ford, General Motors and Stellantis (formerly Chrysler).

And after their contract expires this Thursday, workers are prepared to go on strike if their demands aren't met.

"The Big Three CEOs saw their pay increase by 40 percent over the last four years, while our pay only went up by 6 percent," UAW President Shawn Fain said at a news conference last week.

As of Tuesday, the UAW is proposing an approximately 40 percent compounded wage increase over the course of a four-year contract, a tad lower than its 

General Motors CEO makes 362 times the median employee

General Motors CEO Mary Barra, the highest-paid chief executive among the Big Three, made nearly $29 million in 2022. Securities and Exchange Commission filings show that this is 362 times the median GM employee's paycheck. Publicly traded companies are required to disclose the ratio of their CEO's pay to their median employee's pay.

Fain, UAW's president, said that in comparison, a worker makes $16.50 as an hourly starting wage at Ultium Cells, GM's joint-venture battery plant in Lordstown, Ohio.

"That means a newly hired Ultium worker would have to work full time for 16 years to earn what Mary Barra makes in a single week," Fain said.

The automakers have so far countered the UAW's wage 

with far more modest proposals. As of Friday, the automakers offered raises as high as 14.5 percent over four years, which Fain characterized as "deeply inadequate."

Since the 1990s, CEO pay has skyrocketed alongside the stock market

This kind of pay disparity was not always a given. In 1965, CEOs typically earned 20 times the typical worker's pay in their industries, according to a 

report from the left-leaning Economic Policy Institute

But executive compensation soared, especially in the 1980s and 1990s, when CEOs were lionized and a large chunk of their pay was linked to their company's stock performance. CEO pay skyrocketed along with the stock market, with the S&P 500 increasing by more than 1,000 percent since 1990. In the same period, workers' wages, adjusted for inflation, have barely budged.

In 2021, CEOs earned 399 times the typical worker, the EPI report found.

"Obviously, CEOs should be the highest-paid person in an enterprise," said EPI Chief Economist Josh Bivens, who co-wrote the report. "But the question is, how much higher than everyone else?"

However, the disclosure of CEO-worker pay ratios — a rule adopted in 2018 — doesn't appear to have helped bridge the gap thus far, said Cindy Schipani, a professor of business administration at the University of Michigan.

And these ratios, Schipani added, are exceptionally high at U.S. companies.

"The American free market economy has taken this to such high levels," Schipani said.

The average hourly wage for workers manufacturing motor vehicles and parts, adjusted for inflation, has dropped by more than 20 percent in the past two decades, according to data from the U.S. Bureau of Labor Statistics.

To put that in perspective, in just one year — between 2021 and 2022 — Stellantis CEO Carlos Tavares' total remuneration rose by 22 percent.

The pay disparities rankle autoworkers, especially those who have seen their wages stagnate as their companies' profits have soared in recent years.

Dawnya Ferdinandsen, 54, builds transmissions at a GM plant in Toledo, Ohio, a job she has held since 2016. She earns $27 an hour and says she hasn't had a raise since she was hired.

While CEOs are enjoying their luxury watches and second homes, she said, workers like her are having to make tough choices.

“We've gotta decide, are we going to pay our electric bill? Or, jeez, are we going to go over here and get this medication?” Ferdinandsen said. “We have to make decisions because our pay isn't right.”

Ferdinandsen applauds Fain's "audacious" demands, especially the pay increases and a restoration of cost-of-living adjustments, which were suspended in 2009.

“What ... we want is not going to break the bank,” she said, citing the $250 billion in profits that automakers have taken in over the past decade, according to UAW estimates.

Schipani of the University of Michigan said she doubts CEO-worker pay ratios will go down anytime soon, since top executives are paid based on market demands.

The average worker, Schipani said, doesn't have much leverage when it comes to bridging the gap, although she said a strong union can make a difference.

It's a point that UAW leader Fain has been underscoring as the strike deadline nears.

“Without the work that we do, nothing moves in this country,” Fain told autoworkers at a Labor Day rally in Detroit. “We have the power, and it's time we use that power to get economic and social justice.” 

Business and Economic News

Homepage

Danielle Kaye

Author

Andrea Hsu

As autoworkers' real wages fall, top executives at the Big Three carmakers continue to earn tens of millions of dollars each year — hundreds of times more than the median employee.

Sky-high CEO pay is in focus as workers everywhere are demanding higher wages

Go Deeper.

Like this?