Since 1978, CEO pay at large U.S. companies has grown about 1,085%. Pay for a typical worker has grown about 24% over the same stretch. Economy-wide, worker productivity has grown roughly three times faster than worker pay since 1979. Before that, the two moved together.
This didn’t happen by accident. Economists point to many causes: the decline of unions, trade deals, weak antitrust enforcement, a financial industry that rewards short-term profit, and campaign-finance rules that let money flood into politics. Look closely and nearly every one leads back to the same place. Congress either passed the law that made it happen, or it failed to act when working Americans needed it to.
Would the American people have agreed to decades of flat wages so that corporate profits and executive pay could soar? It’s hard to believe they would have. But they were never really asked. On every one of those decisions, well-funded advocates had a seat at the table in Washington. On the other side were 435 representatives, each speaking for more than 700,000 people: too many constituents, spread too thin, for most of them ever to be heard.
That’s not a failure of capitalism. It’s a failure of representation. A free market works for everyone only when the people who set its rules answer to everyone.
We can’t prove smaller districts would have stopped any one of these laws. What we can say is that a representative accountable to 50,000 people is far harder to outspend and out-organize than one accountable to 760,000. And the House has had no reason to find out, because it hasn’t grown in more than a century.
Sources
- CEO and worker pay since 1978: Economic Policy Institute, “CEO pay in 2023”.
- Productivity vs. pay since 1979: Economic Policy Institute, The Productivity–Pay Gap.