Despite the AFL-CIO's position as one of pay ratio's most ardent proponents since the rule's inception, the federation of unions chose to ignore company pay ratio disclosures this year in favor of calculating the pay ratio their traditional way - using average CEO pay and BLS data for average pay for production and non-supervisory workers. This method, which resulted in an average pay ratio of 361 to 1, differs considerably from the Dodd-Frank mandate, which requires companies to use median pay for their entire global workforce when calculating the ratio.
The AFL-CIO's logic in choosing to continue with its custom pay ratio calculation despite the availability of pay ratio disclosures is likely due to the fact that the actual pay ratios are much lower. According to Center On Executive Compensation data of 397 S&P 500 companies, the average pay ratio is 270:1 with the median coming in lower at 157:1. These figures are consistent with data provided by Equilar which calculated the median pay ratio for the Equilar 500 based on Dodd-Frank compliant company disclosures at 166:1 as of May 10.
As noted, the discrepancy in the ratios begs the question of whether the AFL-CIO deliberately chose to use a method that would result in a higher ratio, regardless of the fact that they were the most vocal supporters of companies being forced to include overseas populations in their ratios and campaigned vigorously for companies not to be allowed the use of discretion in calculating the ratio. Proponents like the AFL-CIO, however, are likely to look to use the pay ratio data in other ways in the future.
Finally, although it chose not to highlight the median company-disclosed pay ratio, the AFL-CIO has collected pay ratios and median employee pay for all Russell 3000 and S&P 500 companies in a free database, a perhaps unexpectedly useful feature to companies and investors alike.