The average chief executive of the United States’ 100 largest, lowest-paying corporations earned 614 times more than their average worker last year, according to a new analysis by the Institute for Policy Studies. The widening gap underscores persistent questions about how corporate profits are distributed across American companies, particularly those that rely heavily on low-wage labor.
The IPS report, released Thursday, found that CEO compensation increased 41.4% between 2019 and 2025, while average worker pay grew by 22.3% over the same period. The disparity represents one of the widest pay gaps among major economies, the think tank said. Median CEO total compensation at these 100 firms reached $14.8 million in 2025, compared to average worker pay of $24,100. The ratio has widened steadily since 2019, when it stood at 432-to-1.
The analysis examined public filings and proxy statements from the 100 corporations with the lowest median worker compensation relative to CEO pay, measuring total compensation packages including salary, bonuses, stock options and other benefits. Among the companies analyzed, the largest pay disparities occurred in industries including retail, hospitality and healthcare, where firms often rely on part-time and contract labor while maintaining substantial executive compensation budgets.
“The growing chasm between executive pay and worker wages reflects a systematic imbalance in how corporate value is distributed,” said Lisa Keene, director of the IPS Economic Justice Program. “While workers have seen modest gains, CEOs have captured an outsized share of corporate profits.”
Analysis: The pay ratio exceeds figures typically cited in congressional hearings, where the Economic Policy Institute has reported ratios closer to 320-to-1 for similar time periods. However, IPS argues its methodology captures a broader range of compensation elements that other analyses may exclude. Several economists note that pay ratios can vary significantly based on how companies define “average worker” – whether including part-time, temporary or contract employees. The IPS analysis uses median compensation across all full- and part-time employees, which tends to lower the denominator.
“These headline ratios often mix apples and oranges,” said economist Jennifer Chen of Georgetown University. “The comparison depends heavily on whether you’re looking at median hourly workers versus full-time salaried employees.”
The report coincides with ongoing debates in Congress over corporate governance and executive compensation disclosure rules. The Securities and Exchange Commission is considering new requirements that would mandate more detailed reporting of pay ratios and methodology. Labor unions and progressive lawmakers have cited the IPS findings to support proposals for tax reforms targeting excessive executive pay, including a potential 2% excise tax on compensation above $1 million per executive.
Background and context
The IPS analysis builds on a trend documented for decades by compensation researchers. Since the 1980s, CEO-to-worker pay ratios in the United States have risen sharply, driven in part by the growing use of equity-based compensation, the decline of manufacturing employment, and changes in corporate governance norms that tie executive pay to stock performance. The current ratio of 614-to-1 among the lowest-paying firms is higher than the roughly 320-to-1 ratio reported by the Economic Policy Institute for the broader universe of public companies, reflecting IPS’s focus on firms where the gap between executive and worker pay is most pronounced.
The industries most represented in the IPS sample – retail, hospitality and healthcare – have faced particular pressure on labor costs. Many of these companies have expanded rapidly over the past decade while relying on part-time, seasonal or contract workers whose compensation often falls below the federal minimum wage when benefits are included. At the same time, executive compensation at these firms has grown in line with overall corporate profits, which surged during the pandemic-era recovery.
The methodology used by IPS differs from the pay ratio disclosure required by the Securities and Exchange Commission since 2018. Under SEC rules, companies must report the ratio of CEO compensation to the median compensation of all employees, excluding the CEO. IPS’s analysis instead focuses on the 100 companies with the lowest median worker compensation relative to CEO pay, effectively selecting for firms with the largest gaps. This approach amplifies the headline ratio but also highlights a subset of companies where the distribution of corporate income is most skewed.
Economists have long debated the appropriate benchmark for measuring executive compensation. Some argue that equity-based pay aligns executives with shareholder interests, while others contend that it incentivizes short-term thinking and excessive risk-taking. The IPS findings add to a growing body of research suggesting that the benefits of corporate growth have increasingly accrued to executives rather than rank-and-file workers.
What to watch next
The IPS report arrives as Congress considers legislation that could reshape how companies report and tax executive compensation. Progressive lawmakers have introduced bills that would impose a 2% excise tax on executive pay exceeding $1 million, with the revenue directed toward worker training and infrastructure programs. Similar proposals have gained traction in states such as California and New York, where lawmakers have sought to tie corporate tax incentives to wage growth.
The Securities and Exchange Commission is also weighing changes to pay ratio disclosure rules. A proposal under consideration would require companies to provide more detailed breakdowns of how they calculate median worker pay, including whether part-time and contract employees are included. Supporters say greater transparency will allow investors and advocates to make more informed comparisons, while opponents argue that additional reporting requirements would impose unnecessary compliance costs.
Federal Reserve officials have signaled concern about income inequality as a potential drag on consumer spending. Minutes from the Fed’s June 2025 meeting showed that several policymakers discussed how widening pay gaps could undermine long-term economic stability. The central bank has not indicated plans to take direct action on executive compensation, but economists say the issue may feature more prominently in future policy discussions.
Labor unions have organized strikes and protests at several companies included in the IPS analysis, demanding higher wages and greater transparency in executive pay. The United Food and Commercial Workers International Union has called for legislation requiring companies to submit executive compensation plans to shareholder votes, a practice already common in European markets.
Conclusion
The IPS analysis highlights a persistent feature of the American economy: the concentration of corporate income among top executives even as many workers struggle with stagnant wages and rising costs for housing, healthcare and education. Whether the latest findings will translate into legislative action remains uncertain. Congress has debated similar proposals for years without enacting sweeping reforms, and business groups have consistently opposed new restrictions on executive pay.
Economists caution that pay ratios alone do not capture the full picture of corporate performance or worker welfare. Factors such as productivity growth, benefits provision and job security also matter. Still, the IPS report adds to a growing chorus of voices calling for greater scrutiny of how companies distribute their profits.
As debates over corporate governance and tax policy continue, the 614-to-1 ratio serves as a stark reminder of the challenges facing policymakers seeking to balance shareholder returns with broad-based economic opportunity.
Sources: The Guardian World, https://www.theguardian.com/us-news/2026/aug/27/ceo-worker-pay-ratio-us-analysis
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Story synopsis gathered from: The Guardian World — source
