The early ’90s and early ’00s recessions led to downticks in the ratio, with the latter drop being more dramatic, presumably because of the collapse of dot-com executive pay when the tech bubble burst. A similar drop has happened due to the financial crisis.
According to the EPI figures, the average CEO received $8,917,000 in compensation in 2009, while the average production worker got $48,130. If this 185.3 ratio were narrowed to 1965’s 24.2 figure solely by increasing average production worker pay, then the average production worker would get around $368,471. If it were narrowed solely by reducing average CEO pay, then the average CEO would get $1,164,746 a year.
If achieving that kind of ratio again is even possible, it would come about through a combination of the two, but most likely the shift would come primarily through lower CEO pay. One could imagine a very steeply progressive income tax with rates that keep rising for incomes over $1 million taking a big bite out of a nearly $9 million compensation package. By contrast, it is difficult to conceive of a policy change that would lead the average manufacturing worker to increase their pay nearly eightfold without changing executive pay.