Executive Report on Compensation Disparities and Sustainable Development Goal Implications

A 2024 analysis reveals a significant widening of the compensation gap between corporate executives and the general workforce in the United States, including in Connecticut. This trend presents substantial challenges to the achievement of key United Nations Sustainable Development Goals (SDGs), particularly those concerning inequality, decent work, and poverty reduction.

National Trends in Compensation Disparity and SDG 10

The annual Executive Paywatch report by the AFL-CIO highlights a growing divergence in earnings that directly undermines SDG 10 (Reduced Inequalities). The report’s key national findings for 2024 include:

• Average CEO compensation at S&P 500 companies increased by 7% to $18.9 million.
• Median worker pay saw a more modest increase of 3%.
• The CEO-to-worker pay ratio expanded to 285-to-1, up from 268-to-1 in the previous year.

This escalating disparity indicates that the benefits of economic activity are not being shared equitably, a core concern of SDG 8 (Decent Work and Economic Growth), which calls for inclusive and sustainable economic growth and productive employment for all.

Methodological Considerations

It is noted that the report’s calculations compare average CEO compensation (including salary, bonuses, and stock options) with median worker pay data from the U.S. Bureau of Labor Statistics. The worker pay data does not include benefits and incorporates part-time employees. Despite these differences, the findings align with other research indicating a significant and growing pay gap since the 1980s.

Analysis of Compensation in Connecticut and Local SDG Implications

The national trend of rising inequality is mirrored at the state level in Connecticut, where extreme wealth and poverty coexist, posing a direct challenge to local progress on the SDGs.

CEO vs. Worker Pay Ratios

Data specific to Connecticut reveals a pay disparity even more pronounced than the national average, further impeding progress toward SDG 10:

1. The average compensation for 14 Connecticut-based S&P 500 CEOs was $19.5 million.
2. The median worker pay in Connecticut was $58,400.
3. This results in a CEO-to-worker pay ratio of 334-to-1.

When broadening the scope to include 66 CEOs of all Connecticut companies in the dataset, the average compensation was approximately $9 million, yielding a lower but still substantial pay ratio of 146-to-1.

Broader Economic Context and Related SDGs

Recent reports from local organizations reinforce these concerns. A study by CT Voices for Children suggests that addressing wage inequality is crucial for stimulating job growth and strengthening the labor force. This aligns with the objectives of SDG 8 (Decent Work and Economic Growth) by arguing that fairer wages, particularly for low and middle-income earners, can improve affordability and drive economic participation. Failure to address these wage gaps risks exacerbating conditions of financial precarity, working against SDG 1 (No Poverty).

Housing Affordability Crisis: A Challenge to SDG 11

The gap between wages and the cost of living is starkly illustrated by the state’s housing market, creating a significant barrier to achieving SDG 11 (Sustainable Cities and Communities), which includes the target of ensuring access to adequate and affordable housing for all.

• A report from the National Low Income Housing Coalition identifies Connecticut as the 11th most expensive state for housing.
• Despite a state minimum wage of $16.35 per hour, this is insufficient to afford rental housing at fair market rates.
• A worker would need to earn $28.68 per hour to afford a one-bedroom apartment and $35.42 per hour for a two-bedroom apartment.

This discrepancy forces lower-income workers, a group disproportionately composed of women and people of color, to work excessive hours to secure basic housing, further entrenching inequality and undermining well-being.

Policy Implications and Path Forward for Sustainable Development

Policy decisions at the federal level, such as the permanent extension of 2017 tax cuts and reductions in social safety net funding, are projected to exacerbate these inequalities, moving further from the targets of SDG 10. The AFL-CIO report estimates that an average S&P 500 CEO could save approximately $489,000 annually from these tax cuts, compared to around $1,510 for a median-income worker.

Addressing these multifaceted challenges requires a collaborative approach. Chris DiPentima, CEO of the Connecticut Business and Industry Association, acknowledged that the state’s high cost of living is a “significant impediment for Connecticut’s workforce.” He called for public and private sector leaders to identify “creative, sustainable solutions” to improve affordability. Such a multi-stakeholder partnership is essential for creating an economic environment that supports the holistic vision of the Sustainable Development Goals, ensuring decent work, reduced inequalities, and sustainable communities for all residents.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth

  The article focuses on wage growth, pay disparities, and the adequacy of wages for affording basic needs. It discusses the quality of work by contrasting the state’s minimum wage with the actual cost of living, which is central to the concept of “decent work.”

• SDG 10: Reduced Inequalities

  This is the most prominent SDG in the article. The entire piece is framed around the widening pay gap between CEOs and median workers, citing specific ratios and income growth differentials. It explicitly states that “runaway executive pay is fueling economic inequality” and highlights how tax policies could “widen the gap even more.”

• SDG 11: Sustainable Cities and Communities

  The article directly links wage inequality to housing affordability in Connecticut. It references a report on the growing gap between wages and rental housing costs, making it a key issue for the sustainability of communities where workers live.

• SDG 1: No Poverty

  The article touches upon this goal by discussing cuts to “social safety net programs like Medicaid and the Supplemental Nutrition Assistance Program, or SNAP.” It also highlights how insufficient wages, despite being above the federal minimum, are not enough to afford basic necessities like housing, pushing working individuals and families towards financial instability.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average.

   The article directly addresses this target by comparing the income growth rates of different economic groups. It reports that “CEO pay at S&P 500 companies increased 7% in 2024… while median worker pay increased 3% over the same period.” This shows that the income growth of median workers is not keeping pace with that of the highest earners, contrary to the aim of this target.

2. Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.

   The concept of “decent work” is central to the article’s discussion of wages. It highlights that Connecticut’s minimum wage of $16.35 is insufficient, as a worker “would need to make $28.68 per hour to afford a one-bedroom” apartment. This gap between the legal minimum wage and a living wage points directly to the challenge of achieving decent work.

3. Target 11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums.

   The article explicitly discusses the lack of affordable housing. It cites the “Out of Reach” report, which found that “many workers struggle to afford housing” and that in Connecticut, a worker would need to make “$35.42 per hour — over two times the state minimum wage” to afford a two-bedroom apartment. This demonstrates a clear failure to ensure access to affordable housing for lower-income workers.

4. Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.

   The article analyzes the impact of fiscal policy on inequality. It claims a federal bill that makes tax cuts permanent and “cuts funding for social safety net programs like Medicaid and the Supplemental Nutrition Assistance Program, or SNAP” will “widen the gap even more.” This directly relates to how fiscal and social protection policies can either promote or hinder the goal of greater equality.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator for Target 10.1: Growth rates of household income per capita among the bottom 40 percent of the population and the total population.

  The article provides specific data points that serve as a proxy for this indicator: the 7% pay increase for S&P 500 CEOs versus the 3% pay increase for median workers. This directly measures the disparity in income growth between the top earners and the general workforce.

• Indicator for Target 10.4: Labour share of GDP, comprising wages and social protection transfers.

  The CEO-to-worker pay ratio is a direct measure of income distribution within a company and, by extension, the economy. The article provides this indicator explicitly: “the average CEO pay was 285 times higher than national median worker pay,” and in Connecticut, the ratio was 334-to-1 for S&P 500 companies.

• Indicator for Target 8.5: Average hourly earnings of employees.

  The article provides multiple data points for this indicator. It mentions Connecticut’s minimum wage ($16.35/hour), the median worker pay in the state ($58,400/year), and the “housing wage” needed to afford rent ($28.68/hour for a one-bedroom). The gap between these figures measures the adequacy of wages.

• Indicator for Target 11.1: Proportion of urban population living in inadequate housing.

  The article implies this indicator by focusing on housing affordability, a key component of “adequate housing.” It quantifies the problem by stating a minimum wage worker must work “more than 80 hours a week, to afford housing in the state.” It also notes Connecticut is the “11th most expensive state for housing in the country,” providing a comparative measure of the housing affordability crisis.

4. Summary Table of SDGs, Targets, and Indicators

Source: ctmirror.org