WASHINGTON — Pay for globe-trotting chief executive has soared to new heights, even as most workers remain grounded by paychecks that are barely budging.
While pay for the typical CEO of a company in the Standard & Poor’s 500 stock index surged 8.8 percent last year to $10.5 million, it rose a scant 1.3 percent overall for workers in the United States.
That CEO now earns 257 times the national average, up from a multiple of 181 in 2009, according to an analysis by the Associated Press and Equilar.
Those figures help document a widening gap between the ultra-wealthy and ordinary workers around the world. That gap has fed concerns about economic security — everywhere from large cities where rents are high to small towns where jobs are scarce.
Why CEOs get huge raises
■ They are paid heavily in stock: Unlike most workers, chief executives receive much of their compensation in the form of company stock — and a lot of it.
The theory behind compensating them this way is that it aligns the interests of those in the ranks of senior management with those of shareholders, which would seem beneficial for a company.
The average value of stock awarded to CEOs surged 17 percent last year to $4.5 million, the largest increase ever recorded by the AP.
■ Peer pressure: Corporate boards often set CEO pay based on what the leaders of other companies make. No board wants an ‘‘average’’ CEO. So boards tend to want to pay their own CEO more than the rival CEOs who are chosen for benchmarking the compensation packages.
■ The superstar effect: Companies often portray their CEOs as the business equivalents of LeBron James or Peyton Manning — athletes who command (and deserve) enormous pay for their performance and ability to draw crowds. As corporate giants compete around the world, the drive to procure corporate superstars has helped to inflate CEO pay.
■ Friendly boards: Some company directors defer to a CEO’s judgment on what his or her compensation should be. There’s a good reason for that: Many boards of directors are composed of current and former CEOs at other companies. In some cases, board members are essentially hand-picked — or at least vetted — by the CEO.
Why many of us get no raise
■ Blame the robots: Robots and computers are displacing jobs that involve routine tasks, such as those done by workers on assembly lines and secretaries and bookkeepers in offices, according to research by David Autor, an economist at the Massachusetts Institute of Technology. As these middle-income positions vanish, workers are struggling to find new occupations that pay as much.
■ High unemployment: The aftermath of the Great Recession left a glut of available workers. Businesses face less pressure to give meaningful raises when a ready supply of job seekers is available. They are also less concerned that their best employees will defect to another employer.
■ Globalization : Companies can cap wages by offshoring jobs to poorer countries, where workers earn less than the poorest Americans, on average. For example, a typical Chinese factory employee made $1.74 an hour in 2009, according to the Bureau of Labor Statistics — or roughly a tenth of what his counterpart in the United States made.
■ Weaker unions: Organized labor no longer commands the heft it once did. More than 20 percent of US workers were unionized in 1983, compared with 11.3 percent last year, according to the Bureau of Labor Statistics.
■ Low inflation: For the past five years, the government’s standard inflation gauge, the consumer price index, has averaged an ultra-low 1.6 percent. When inflation is high, employees tend to factor it into the pay raises they request. But when inflation is as low as it has been, it almost disappears as a factor in pay negotiations.