America’s Toxic Pay Divide: How CEOs Got 632 Times Richer While Workers Fell Behind

America’s Toxic Pay Divide: How CEOs Got 632 Times Richer While Workers Fell Behind

CEO pay is soaring to record highs while workers at America’s biggest low-wage companies are falling further behind—and the economic fallout could reshape corporate capitalism.

In 2024, a Starbucks barista earning about $15 an hour would have to work more than 6,600 years to match what the company’s CEO, Brian Niccol, made in a single year. His total compensation: $95.8 million.

That staggering figure isn’t just a headline—it’s a symptom of a much bigger problem. According to the Institute for Policy Studies’ (IPS) 2025 Executive Excess report, the average CEO-to-worker pay ratio at the 100 lowest-paying firms in the S&P 500 ballooned from 560:1 in 2019 to 632:1 in 2024.

While corporate profits hit historic highs, most employees saw wages stagnate—or fall behind inflation.

What Is the CEO-to-Worker Pay Gap?

The CEO-to-worker pay gap measures how many times more a company’s chief executive earns compared to its median employee.
For example, a 600-to-1 ratio means the CEO earns six hundred times the typical worker’s pay.
In 2024, the average ratio at America’s lowest-paying large corporations hit a record 632 to 1, according to the IPS study.

The Low-Wage 100: A Record of Corporate Imbalance

From 2019 to 2024, CEO pay at these firms jumped 34.7%, while median worker pay rose just 16.3%—well below the 22.6% inflation rate over that period.
The result? Workers effectively lost purchasing power even as executive wealth exploded.

Average CEO compensation reached $17.2 million last year, compared with a median worker wage of $35,570. At 22 of the 100 companies, worker pay actually declined.
One of the worst offenders, Ulta Beauty, saw median pay plunge 46% to $11,078, largely due to an expanded part-time workforce.

“Median pay increased only modestly, whereas CEO pay really skyrocketed,” said Sarah Anderson, director of the Global Economy Project at IPS. “That imbalance isn’t just unfair—it’s unhealthy for companies and the economy.”

Starbucks: A Case Study in Corporate Contradiction

Starbucks now stands as the poster child for executive compensation inequality.
Despite unionization efforts at more than 570 U.S. stores, the company’s median pay rose just 4.2% from 2019 to 2024.

At the same time, CEO Brian Niccol’s total compensation exploded, producing a 6,666-to-1 pay gap, the highest in the S&P 500.
“It's a stunning message to send to their workers,” Anderson said. “It shows exactly who they value—and who they don’t.”

Starbucks did not respond to requests for comment on the report.
But filings show that the vast majority of Niccol’s pay came not from salary, but from stock options and performance awards—a structure that directly links executive wealth to stock price rather than employee welfare.

Stock Buybacks vs. Worker Wages

If CEOs are getting richer, the reason often lies in stock buybacks, which inflate share prices and trigger bonus payouts.

Between 2019 and 2024, the Low-Wage 100 spent a combined $644 billion on buybacks—more than half of them spending more on repurchases than on capital improvements.

• Lowe’s led the list with $46.6 billion in buybacks—about $28,456 per employee—while paying the average worker $30,606.

• Home Depot followed with $37.9 billion spent, alongside a median worker salary of $35,196.

Such spending creates what economists call the stock buyback controversy: a short-term profit boost that rewards investors and executives but leaves workers behind.

“It’s the financialization of the American corporation,” one analyst said. “They’re investing in share prices, not in people.”

Billionaires Built on Low Wages

The IPS report identified 32 billionaires whose fortunes are directly tied to Low-Wage 100 corporations.
Among them:

• Eight billionaires from Walmart (including Rob and Alice Walton, whose combined net worth exceeds $130 billion)

• Four from Estée Lauder

• Three from DoorDash

These families are among the richest in the world, yet their companies anchor some of the lowest median wages in corporate America.

The Corporate Time Bomb: Why America’s Pay Gap Could Backfire

If corporate boards view rising executive pay as a harmless reward for performance, experts warn they’re missing the bigger picture.
Extreme income inequality carries measurable business risks: falling morale, shrinking consumer demand, reputational damage, and rising political backlash.

“Every dollar spent on buybacks instead of wages is a dollar not circulating through the real economy,” said one labor economist. “It’s a slow leak that eventually drains productivity.”

Institutional investors are beginning to agree. CalPERS, the nation’s largest public pension fund, and shareholder group As You Sow have both warned that excessive executive compensation can become a systemic risk—fueling social unrest, policy intervention, and long-term damage to corporate trust.

As one CalPERS director told the SEC in June:

“When I walk into a business, I’m interacting with lower-wage workers. They’re the face of your company. Boards need to think more about them.”

Public Opinion and Policy Pressure

Americans are overwhelmingly skeptical. A 2024 Data for Progress survey found that 80% of voters support tax penalties for companies paying their CEOs more than 50 times their median worker’s salary.
A separate FlexJobs poll found 69% of workers don’t believe their CEO could do their job for even one week.

Senator Bernie Sanders and Representative Rashida Tlaib are pushing legislation that would make those views law—the Tax Excessive CEO Pay Act—designed to raise corporate tax rates in proportion to pay inequality.

Other lawmakers advocate increased taxes on stock buybacks, aligning with President Biden’s push to curb executive excess and redirect capital toward wages and innovation.

Historical Context: A Century of Divergence

Back in 1965, the average U.S. CEO made just 21 times more than the typical worker.
By 2024, that number had exploded to 281:1 across the top 350 U.S. firms, according to the Economic Policy Institute (EPI).

“From 1978 to 2024, CEO compensation rose more than 1,000%, while typical worker pay grew only 26%,” said EPI economist Josh Bivens. “That’s not productivity—it’s power.”

EPI’s data also shows that nearly 80% of modern CEO income comes from stock-related awards, turning executives into short-term investors in their own companies.

The Bigger Picture: Can Business Rebuild Trust?

The 632-to-1 pay gap isn’t just a moral problem—it’s a leadership problem.
When employees see record profits and stagnant wages, loyalty erodes.
When consumers associate brands with greed, reputation suffers.
And when shareholders reward inequality, long-term growth loses out to short-term gains.

As IPS’s Sarah Anderson puts it:

“CEOs are focused on making themselves even richer, instead of thinking about the welfare of their employees or the long-term health of their companies. That’s not sustainable—for workers or for capitalism itself.”

Unless corporate America finds the will to realign executive rewards with real-world value, the 632-to-1 divide could become a ticking time bomb for the entire U.S. economy.

Data Source: Institute for Policy Studies (2025 Executive Excess Report) and SEC Filings.
Ratios indicate how many times more each CEO earned than the company’s median employee in 2024.

Frequently Asked Questions About the CEO Pay Gap (2025 Update)

What is the CEO pay gap in 2025?
The 2025 IPS Executive Excess report found the average CEO-to-worker pay ratio among America’s lowest-paying S&P 500 firms rose to 632 to 1, up from 560 to 1 in 2019.

Which companies have the biggest CEO pay gaps?
Starbucks ranks first, followed by Ulta Beauty, Lowe’s, Home Depot, and Walmart—all part of the IPS “Low-Wage 100” list of S&P 500 firms with the lowest median pay.

Why do CEOs make so much more than employees?
Most executive compensation comes from stock options, restricted shares, and performance bonuses—not salary. These awards rise sharply during stock buybacks or share-price surges.

What policies could narrow the CEO-worker pay gap?
Proposals include the Tax Excessive CEO Pay Act, higher buyback taxes, and reforms linking executive bonuses to worker wage growth and long-term performance instead of quarterly stock price gains.