The median chief executive at an S&P 500 company took home $17.7 million last year, roughly two hundred times what the median worker in the same building made, and the only thing more absurd than the number is the story the board told to justify it. As our coverage of the new Associated Press pay survey details, the boards attributed this windfall to strong profits and the pressing need to retain top executives through multiyear stock awards. The AP’s headline is real and worth quoting. What it doesn’t tell you is what produces the number it describes.
I’ll concede the half that’s true. Running a multinational corporation is hard. You need someone at the top, and you need to pay them enough that they do not quit. Senior executives do, occasionally, take actions that lift a company’s long-term value. But notice the next move. The metric they’re “retained” against is almost always the stock price — and the stock price, in this country, is moved by a buyback. The same board that approves the CEO’s pay package almost always approved the buyback that’s pushing the stock up. Walk me through, slowly, why the ratio that falls out of this is a market discovery rather than the board’s choice.
The committee just wrote a number on a piece of paper that made the people writing the paper very rich. The wealth a corporation generates does not fall from the sky. It comes from the labor of the people in the building. When the pay ratio shifts from the twenty-to-one norm of the mid-twentieth century to two hundred to one, the market was the same market and the product was the same product — the ratio moved when the law and the norms around it moved, and nowhere else. That is not a miracle. It is a transfer. The workers who got a 4.7 percent raise are still running up credit card debt to buy groceries, while the executives taking home nine-figure packages leave the rest of the workforce behind. And the follow-up coverage showing a dozen CEOs clearing $200 million in 2025 is the choice being made harder, not softer — same survey, a month later, higher peaks. The line is going the wrong direction.
The “stick around” story is a decoy. The real mechanism is that the people who set the pay have simply decided to capture a vastly larger slice of the value the workers create — the same dynamic that has driven billionaire wealth to surge 31.8 percent while workers struggle to keep pace. Mondragon, the Basque cooperative federation that competes head-to-head with S&P 500 firms in industrial manufacturing, retail banking, and food distribution, retains its executives just fine on a ratio capped at about six-to-one. About eighty cooperatives. Roughly seventy thousand worker-owners. Eleven billion euros in annual sales. Two markets, two ratios, a gap of roughly forty-fold between them. The American compensation committee did not discover a market-clearing price for genius that the Basques somehow missed.
Okay — what gets built on the empty lot?
A five-to-one pay ratio is a choice. So is two hundred to one. We already know how to organize ownership so that the people who build the value get to keep it. The U.S. Federation of Worker Cooperatives estimates more than 1,300 worker cooperatives now operate in this country, and they are growing — in a co-op, the workers are the owners, they vote on the pay ratio, the profit stays in the firm or goes into the members’ capital accounts. Employee Stock Ownership Plans have been around for half a century; roughly fifteen million workers now belong to one, through about 6,500 plans, with bipartisan support and no serious political objection to their structure. The largest U.S. worker cooperative, a home-care firm in the Bronx, has been paying its workers a living wage and staying in business for forty years. Germany puts workers on the supervisory board with binding votes on executive pay; German industry did not, in fact, slide into the sea. Denmark doesn’t put them on the board at all and has done something harder — it built the flexicurity bargain that lets the worker, not the job, hold the floor, so losing one doesn’t end you on the street.
We are not inventing from a blank page. Rural electric cooperatives serve forty-two million Americans. The Bank of North Dakota has been publicly owned and profitable every year since 1919. Credit unions hold a hundred and forty-five million memberships. We are pointing at things that already exist and asking why we built so few of them.
The honest version of the harder question: America doesn’t have organized labor at the scale the Basque Country does, doesn’t put workers on boards the way Germany does, and has spent forty years dismantling the legal scaffolding — Taft-Hartley, the right-to-work laws it enabled, the steady erosion of sectoral bargaining — that once made board capture harder. Building a version of this that actually works here means rebuilding the institutional machinery that lets workers bargain as a class. That is slow, unglamorous work. It is also the only kind that has ever worked.
The economy is a set of choices, not the weather. For the last forty years, the people in the boardroom have chosen to take the lion’s share and call it the market, backed by the shareholder primacy doctrine and compensation committees that answer to no one but themselves. We can choose to weld the trap doors shut. The obstacle is not economic law — it is the people who benefit from the arrangement and the governance structures that let them write their own paychecks. The board picks. The interesting question is who else gets a vote.