CEO vs. Worker Pay in Top 3000 US Companies
The data set aims to explore and visualize the relationship between CEO pay and worker pay, compare different industries and companies, and uncover patterns and trends in the data. This dataset is an important resource for anyone interested in promoting pay equality and advocating for fair wages.
Softwares Utilized
RStudio, Excel
Year
Fall 2023
Problem Statement
The CEO-worker pay ratio is a pivotal measure that sheds light on the internal compensation dynamics of companies and plays a crucial role in understanding the broader socio-economic landscape. This study focuses on exploring the intricacies of CEO-worker pay ratios within the top 3000 companies in the United States, considering diverse factors such as gender, industry affiliation, and corporate rankings.
Data Source and Description
Open Source Dataset
Kaggle
S&P 500 Companies (INDEXRUSSELL)
Russell 3000 Companies (INDEXSP)
Industries
Financials
Industrials
Healthcare
Information Technology
Consumer Discretionary
Real Estate
Materials
Energy
Consumer Staples
Communication*
Utilities
Limitations
Data completeness
Data relevancy of "median worker pay"
Other companies not ranked (private, mergers)
*Communication includes Meta and Alphabet
Data Preprocessing Steps
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Analyzing Data Source
Use R functions like dim, summary, ncol, nrow and summary to view raw data.
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Cleaning Data
Ensure uniformity by removing NULL values.
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Normalizing Data
Replacing and ensuring usability of data using gsub for “$” and “:1” to integers.
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Creating New Columns
Adding and merging datasets against ‘ticker’ for companies like Company Size, ESG Risk Levels, and Categorization.
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Using Data as Integers and Categories
Classification of salary, and Gender of CEO.
Approach and Analysis
Analysis for this dataset was done on R Studio. In order to explore the relationship between the hypothesized factors, data was plotted using ggplots packages. Data was visualized based on five hypotheses.
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Male CEOs in the Information Technology have a higher pay ratio than Female CEOs in the Information Technology. They are inversely correlated, there is a relationship.
Analyzed using Categorical Nominal: “M” and “F”
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Financial companies with a higher Rusell 3000 Rank, there will be a higher CEO-worker salary ratio.
Analyzed using categorical ordinal data, where Rusell 3000 ranking is highest at the top (#1) and lowest at 3000.
R-value: -0.05698869 (weak negative correlation)
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Healthcare companies have the highest median worker pay, and the lowest CEO-worker salary ratio. They are inversely correlated.
Type of Plot: Continuous Interval Data
R-Value: -0.3608818 (strong negative correlation)
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Female CEOs in the Top 100 companies have higher CEO-worker salary ratio than the Male CEO’s in the top 100. Companies with Male CEO’s have a 3:1 ratio and have a higher median work pay.
Type of Plot: Continuous Discrete Plot
R-Value: 0.0008506226 (no correlation)
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Industrial companies with a higher pay ratio indicate in general a higher CEO-worker salary. This shows a positive correlation relationship. Additionally, CEOS in the industrial sector are heavily male with only 6% of CEOS represented in the dataset being female.
Type of Plot: Continuous Interval Plot
R-value: 0.4349431 - strong positive correlation
Gender Themed: Trends for IT Sector, Gender Themed: Trends for IT SectorGender Themed: Trends for IT Sector
Gender Themed: Trends for IT Sector, Gender Themed: Trends for IT SectorGender Themed: Trends for IT Sector
Gender Themed: Trends for IT Sector, Gender Themed: Trends for IT SectorGender Themed: Trends for IT Sector
Gender Themed: Trends for IT Sector, Gender Themed: Trends for IT SectorGender Themed: Trends for IT Sector
Gender Themed: Trends for IT Sector, Gender Themed: Trends for IT SectorGender Themed: Trends for IT Sector
Gender Themed: Trends for IT Sector, Gender Themed: Trends for IT SectorGender Themed: Trends for IT Sector
Project takeaways
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Gender Bias at the executive level in Multiple Sectors showing that Diversity and Inclusion needs improvement
Takeaway 1
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Effects of Data Processing on making relevant assumptions and conclusions
Takeaway 2
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Data only covers top publicly traded companies so private companies may yield different results as far as pay gap or gender bias
Takeaway 3
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Pay gap could be attributed to factors such as competition in industries and meeting marketing demands in a highly competitive environment
Takeaway 4
Conclusion
“At best, 1 CEO is paid 78x more than the average worker, and at worst 490x”
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Gender wage gap in IT Industry and S&P500 Companies
Men still outnumber women in executive-level leadership positions
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The highest-paid employees are employees with specialized roles and advanced degrees.
Most employers account for the cost of living, therefore the highest-paid states include: California, New Jersey, and Massachusetts.
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Highest CEO-Worker Pay ratio:
Consumer Discretionary, Communication Services, Consumer Staples, and IT
Is that still acceptable in 2023?
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Russell 3000 and S&P500 companies should be selected based on CEO-Worker pay ratio.
Set a threshold for CEO-Worker pay ratio limit.
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Emphasis gender diversity at all levels especially c-suite executive levels.
Ensure that each c-suite has at least a minimum of 2-3 female on the board.
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Further research be done on gender diversity and the productivity of a company, proving the successes that come with diversity in top companies.