AFL-CIO report highlights widening executive-worker pay gap as inequality deepens

Chief executives in S&P 500 companies earned an average of $22.8 million in 2025, marking a 21 per cent increase from the previous year, according to the AFL-CIO’s annual Paywatch report. The labour federation’s analysis indicates that the ratio of executive pay to median worker earnings has risen to 312 to one, up from 285 to one in 2024. The report warns that this widening divide contributes to economic inequality and incentivises short-term decision-making that may compromise long-term corporate stability.

The AFL-CIO, the largest coalition of labour unions in the United States, stated that excessive compensation creates a risk that leaders will prioritise personal paycheques over the health of their companies or the broader economy. The federation noted that while the average S&P 500 CEO pay is nearly double what it was a decade ago, the disparity varies significantly across sectors, with manufacturing showing the highest executive-to-worker income gap.

Elon Musk’s compensation was excluded from the average S&P 500 calculation due to its outlier status. As CEO of Tesla, Musk earned $158 billion in 2025, a figure that dwarfed the company’s $94 billion revenue and represented 2.5 million times the median Tesla worker’s pay. His earnings were further inflated by the initial public offering of SpaceX, which briefly made him the world’s first trillionaire, while he simultaneously served as head of the Department of Government Efficiency in the first half of the year.

Despite the surge in executive pay, Tesla reported a 3 per cent decline in revenue and a 9 per cent drop in sales in 2025, alongside 11 vehicle recalls affecting 745,000 cars. The company faced consumer boycotts related to Musk’s role in President Donald Trump’s second administration. In the broader manufacturing sector, the average CEO earned $696 million against worker earnings of approximately $93,000, highlighting the extreme disparities within the industry.

Other major corporations also featured prominently in the report’s findings on wage stagnation and executive wealth. Starbucks workers earned an average of $17,279, only $1,629 above the 2025 federal poverty line, while CEO Brian Niccol earned over $30 million, creating a 1,794 to one pay ratio. The report also identified Amazon, McDonald’s, and Walmart workers as the largest recipients of social assistance programmes, underscoring the growing reliance on public support among low-wage employees.

The AFL-CIO’s analysis extended to political figures, noting that Donald Trump’s income surged 254 per cent in 2025 to $2.2 billion, primarily from his cryptocurrency venture World Liberty Financial and meme coin sales. These earnings equated to 43,154 times the median US worker’s income. The report coincided with data showing US consumer sentiment slipping 8 per cent and the labour market shedding 23,000 jobs in July, as approximately 37 per cent of US adults reported an inability to cover a $400 emergency expense.