The pay gap between CEOs
and workers is much worse
than you realize

By Roberto Ferdman

The Washington Post

Thursday, September 25, 2014--Americans might think they know how bad inequality is, but it turns out they actually have no idea.

A new study conducted at Harvard Business School found that Americans believe CEOs make roughly 30 times what the average worker makes in the U.S., when in actuality they are making more than 350 times the average worker.

"Americans drastically underestimated the gap in actual incomes between CEOs and unskilled workers," the study says.

But that underestimation isn't merely drastic—it is also unmatched in the world.

The gap between Americans' perception and reality is the most among any of the 16 countries for which the researchers measured both the perceived and actual pay inequality.

Part of that stems from Americans’ comparatively modest estimation.

The citizens of four countries—South Korea, Australia, Chile, and Taiwan—estimate a higher pay gap between CEOs and low level workers.

In South Korea, the perception is that CEOs make 42 times more than the average worker; in Australia, it’s just over 41; in Taiwan, it’s roughly 34; and in Chile, it’s about 33.

But the reason Americans are so bad at guessing how much CEOs make may also be tied to the fact that American CEOs are significantly better paid than those from just about anywhere else.

The average CEO in the United States makes more than $12 million per year, which is nearly five million dollars more than the amount for those in Switzerland, where the second highest paid CEOs live, more than twice that for those in Germany, where the third highest paid CEOs live, and more than twenty one times that for CEOs in Poland.