5.5 Activity: CEO compensation

Income inequality has been in the news a lot recently. According to a recent Pew Research survey, about 60% of Americans believe that there is too much income inequality in the U.S.

One way that income inequality is measured is by comparing the salaries of CEOs for large public firms to the salaries of average workers in their companies. In 1965, CEOs of large firms made about 20 times as much as a typical worker in their company. In 1989, CEOs made 60 times as much as a typical worker in their company.

In this activity, we’ll explore the research question:

What is the average ratio of CEO pay to worker pay in 2019?

To explore this question, we’ll look at the CEO to worker compensation ratio for a random sample of 20 of the largest firms in the U.S.

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