The gulf between a CEO’s paycheck and their typical employee’s has always been vast. But the advent of AI is already threatening to exacerbate that gap, enriching the C-suite at the expense of their employees, according to a new report from the AFL-CIO.
The average CEO compensation among S&P 500 companies last year was $16.7 million — the second-highest level of executive pay ever, according to the group’s annual Executive Paywatch report. (2021 was the highest at $$18.3 million)
CEO pay fell last year compared to the previous year, said Brandon Rees, the AFL-CIO’s deputy director of corporations and capital markets. “However, it didn’t fall nearly as much as stock prices fell, at which is the CEO’s favorite yardstick for measuring their own performance.”
The S&P 500 fell by more than 18% in 2022, versus a decline of just 9% for the average CEO’s pay package.
“By any measure, CEO pay is still off the charts by historical measures,” Rees added.
To put that $16.7 million in context: Assuming a 45-year career at an average pay of $75,200, regular employees would need to work more than five lifetimes to make what the average CEO receives in a single year.
CEO compensation is determined by a company’s board, and typically includes a base salary along with stock options and bonus incentives — all of which is intended to ensure the boss gets rich only if the company does too. The top-tier pay also accounts for executives’ typically long hours and unique qualifications.
Of course, critics are quick to note those boards are usually stacked with executives or former executives who benefit from the system.
Meanwhile, US workers’ real hourly wages fell in 2022 for the second year in a row by 1.6% after adjusting for inflation, the executive pay report found.
Among the biggest concerns raised in the latest pay report is the way artificial intelligence is poised to benefit executives more than their employees.
“The AI revolution has potential to unleash broad-based prosperity that improves working conditions and lifts us all up,” said AFL-CIO Secretary-Treasurer Fred Redmond. “But if it’s left unchecked, AI can increase economic inequality and undermined job security … It doesn’t have to be this way, and working people are starting to fight back,” he said, noting how AI has become a central sticking point in the Hollywood strike.
Researchers said CEOs are rushing to incorporate AI into their businesses without protections for workers or workers having input on how AI will be used.
While noting the labor movement doesn’t oppose technological innovations that make work easier, Redmond said workers deserve a voice in how new technology is implemented. Film and TV writers, for example, have called AI chat bots “plagiarism machines” because they can be trained on human-created scripts to create so-called new content.
“We really think that it’s important that when companies tell us they can’t afford it, or that it doesn’t work for their business model that we need to look at what they’re doing with executive compensation and actually call them out for the inconsistency and hypocrisy that that reflects,” said Duncan Crabtree-Ireland, the national executive director and chief negotiator for SAG-AFTRA. “Our members are rightly concerned about these big companies taking and owning their image, their likeness, digital replicas of them, and really replacing them as workers.”
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