This week, the Wall Street Journal published an interactive analysis of compensation rates for median employees, based on the pay ratio disclosure, for over 1,100 companies which confirmed that industry and company size effectively dictate employee compensation levels. The analysis, authored by Theo Francis – author of multiple other examination of pay ratio – and Yaryna Serkez, also provided some examinations of factors which result in disparate pay ratios among close competitors. Among the points made in the analysis include:
- For the 1,111 companies in the S&P 1500 which disclosed the pay ratio, median pay for about half the companies fell between $44K and $99K.
- The highest pay is often at very small companies while the lowest pay is at the largest companies with the highest number of employees.
- Some businesses are smaller due to outsourcing what it refers to as “core work” and thus have higher median employee pay. The article references the difference between toy companies Hasbro and Mattel which was subject to an earlier article by Francis.
- Larger companies, like retailers and restaurant companies, often have a significant number of temporary and seasonal employees which result in a lower pay ratio number.
- Two types of companies, industrial and manufacturing had lower wages due to extensive overseas operations.
Consistent with other articles written by Francis, the article highlights the difference between Dunkin Brands, owner of Dunkin Donuts, which had a median employee pay of $110,471 due to owning only 92 of 11,701 restaurants and operating none of them. Dunkin's ratio is contrasted to McDonald’s which directly employs hourly employees at more of its restaurants.
Although none of the takeaways is a surprise, the lack of surprise reflects a point the Center has consistently made regarding the pay ratio and employee compensation levels – they are each determined by the market and industry in which a company operates. With the media reporting unsurprising pay ratio results in year one, it would not be surprising to see pay ratio advocates focusing on other areas, like examinations of the year over year change in employee pay compared to the CEOs in 2019.