The Widening Wage Gap Between Workers and CEOs

Have you ever felt like the CEO of your company is overpaid?

You wouldn’t be alone—an April poll conducted by FlexJobs found that 80% of workers believe their CEOs are overpaid.  And now, there’s data to back up that belief. 

An analysis by the Institute for Policy Studies, a left-leaning think tank, found that the salary gap between workers at the lowest-paying companies of the S&P 500 and their CEOs widened by nearly 13% in the last five years. Indeed, CEO pay rose more than twice as quickly as that of the average worker at such firms. 

The worst offender? Starbucks, where CEO Brian Niccol reportedly earned $95.8 million last year compared to $14,674 for the coffee chain’s average worker. Ulta Beauty saw the largest decrease in average employee earnings with a 46% drop to $11,078, as the beauty retailer increased its reliance on part-time workers. 

Such pay gaps also widen gender and racial disparities, according to the report, because women and people of color disproportionately make up a large share of low-wage workers and a smaller share of corporate leaders at such companies. Only eight of the “Low-Wage 100”—the 100 S&P 500 companies with the lowest median worker pay—have women CEOs, and just one has a Black CEO. 

Frustration over salary and pay may explain why terms like “quiet cracking”—the latest HR buzz word that refers to the constant state of disengagement, burnout and low morale at work—are making their rounds on social media. 

Contributor Rahkim Sabree calls this trend a response to workplace financial trauma, the invisible thread tying dissatisfaction, stress and survival-mode behavior to the reality of needing a paycheck. Anyone heard of job hugging?

Before we dive into this week’s news, a slight programming note: We’ll be taking a short break next week and will return to your inboxes on September 9. Hope you have a lovely week and enjoy Labor Day!

— Maria Gracia Santillana Linares, Careers Reporter

WORK SMARTER 

Practical insights and advice from Forbes staff and contributors to help you succeed in your job, accelerate your career and lead smarter.

• Do you feel like you don’t have a strong network? Start by reframing your mentality and focus on curiosity over transactions. 
• Here’s how AI can catapult women into leadership positions. 
• Gen Zers: Are you having trouble finding a job? Try these three moves to beat out one of the worst job markets in recent memory.

DEEP DIVE: America's Top Colleges

Amid increasing tuition rates and federal cuts to university funding, Forbes released its annual list of America’s Top Colleges this week, ranking the 500 best universities in the U.S. 

It’s been a rough year for American colleges and their students. President Donald Trump’s administration has pulled back funding from major institutions, and the threat of AI has many undergraduates reconsidering their majors and what post-graduate employment will look like. 

Forbes annual Top Colleges list ranks universities based on undergraduate outcomes, highlighting those that produce successful, high-earning and influential graduates from all economic backgrounds—and with less student debt. 

Still, it’s easy to wonder if a college education is really worth it. Research shows that when looking at lifetime earnings, college degrees still earn more. But with student loan forgiveness policies rapidly changing and a tough job market for Gen Z graduates, it’s understandable for both parents and students to be worried. 

Forbes’ Francesca Walton put together the 25 schools that offer the best return on investment, which takes into account the number of years it takes graduates to recoup the net tuition cost, the percentage of students that take on debt to attend a school, and how much debt those graduates leave with. 

The list includes both private and public schools, spanning from colleges in the City University of New York system to Ivies like Princeton and Harvard University.

TOUCH BASE

News from the world of work.

• Social workers from hundreds of federal agencies will now use Anthropic’s AI models, through a partnership with startup Binti, to fill out paperwork for their clients. The technology allows social workers to use recordings of their conversations to fill out administrative reports and pull information from handwritten notes, Forbes’ Richard Nieva reports. 
• President Donald Trump said Monday that he’s moving to fire Federal Reserve Governor Lisa Cook, citing allegations of mortgage fraud. It’s the president’s latest move in his escalating battle against the Fed, which has resisted Trump’s demands to cut interest rates. Cook’s removal is likely to go to court as she said in a statement that the president “has no authority” to fire her and that she will not step down.
• Higher pay still matters for small businesses looking to recruit new hires, but economic challenges are stifling salary budgets, according to the Forbes Research 2025 Small Business survey. The survey found that inflation could keep wages down this year, even as employers look to keep their employees happy and engaged.
• Target CEO Brian Cornell announced last week that he’d be stepping down after the retailer was hit with a third consecutive quarter of sales declines. Target’s financials have been hit by tariffs, changes in consumer spending and a consumer boycott over its removal of DEI policies this year. The retailer’s COO Mike Michael Fiddelke is set to succeed Cornell on February 1.