Low Salaries May Be the Culprit for 183 CEO Exits in U.S. Government Sector

The undervaluation of leaders in essential services is reaching a critical point, with 183 U.S. CEO exits in the government/nonprofit (NPO) sector from January to April 2024, the highest in all sectors.

The number increased by 48% compared to the 124 CEO exits in the sector during the same period last year. 

While the reasons behind these resignations have yet to be known, a study from B2B marketplace DesignRush reveals that a decrease in compensation among specific sectors may just be the culprit.

Our exclusive report highlights the industries with the lowest CEO salaries, shedding light on the wage disparities and growth trends that characterize these sectors.

As expected, topping the list is the Federal, State, and Local Government sector, which remains the lowest-paying industry for CEO-level jobs with an average wage of $151,920 per year in 2023. 

While it boasts a modest wage growth of 7.59% from 2019 to 2023, the wage ratio is relatively low at 2.04, indicating a smaller disparity between CEO and average worker wages compared to other sectors. 

The Accommodation and Food Services sector comes second, with an average CEO wage of $167,590 in 2023. Notably, the sector saw a significant decline of 10.85% in CEO wages, reflecting the industry's ongoing challenges.  

With limited demand and an abundance of candidates, employers strategize to cut costs by offering lower compensation, heavily reflected in the wage ratio of 4.63 which indicates a moderate disparity between CEO and average worker wages.

Coming in third is the Construction sector, with an average wage of $208,780 in 2023. CEO wages in this industry decreased by 5.55% from 2019 to 2023.  

Despite this decline, the wage ratio remains at 3.10, indicating a smaller disparity compared to other private sectors. 

In fourth place is the Educational Services sector, which saw a wage growth of 5.70% from 2019 to 2023, but saw a 3.03% decrease in its average wages.  

The wage ratio of 3.19 indicates a moderate disparity between CEO and average worker wages. 

The fifth sector in the list belongs to Other Services, excluding Public Administration. This sector experienced a modest CEO wage growth of 2.47%, resulting in a wage ratio of 4.13.  

DesignRush’s Methodology 

DesignRush derived the data on wages from the Occupational Employment and Wage Statistics (OEWS) survey provided by the Bureau of Labor Statistics (BLS).  

From here, data for average wages and CEO wages was extracted for each industry to calculate the wage growth and rankings. 

Industries like the government and education sectors show smaller disparities between CEO and average worker wages. 

In contrast, sectors like Accommodation & Food Services, and Construction illustrate more significant declines in CEO compensation, influenced by high competition for jobs and cost-cutting strategies. 

Overall, our findings underscore the wage gap in executive leadership across different sectors, particularly within public services. This comes as a probable cause for the high number of CEO exits, particularly in the NPO sector.

As industries continue to adapt to economic challenges, executive compensation remains a key factor in shaping these trends. 

Recently, DesignRush also released a study on the 10 states where CEO salaries dropped the most to help companies create more attractive compensation packages that will boost employee productivity and retention.

Editing by Katherine 'Makkie' Maclang