January 13, 2020

Why Are CEOs Paid So Much?

By Stephanie Denning

With the growing inequality in the United States, CEO pay has been a growing topic of conversation. Why are CEOs paid so much when almost 40 million people are living in poverty in the United States? Why do New York and San Francisco have the highest concentration of CEOs worldwide but also have some of the highest rates of homeless in the U.S.?

In New York City, where I live, it isn’t uncommon to walk by buildings of some of the world’s wealthiest companies with a row of homeless individuals living in abject poverty right below it. Looking at these two extremes in tandem makes the injustice at once heartbreaking and infuriating. Why are some CEOs paid exorbitant amounts when other citizens aren’t even afforded what should be the basics of life?

In today’s political and social discourse, a frequently advanced argument is that exorbitantly high CEO pay is the cause of many of America’s inequality problems. It is often cited as the villain in America’s income inequality tragedy. Greedy CEOs, the narrative goes, are pocketing productivity gains from their firms.