Is Offshoring A CEO Boon?

Chief executives of U.S. companies that sent the most service jobs overseas last year saw the greatest boost to their own paychecks, according to a study released last week by think tanks Institute for Policy Studies and United for a Fair Economy. Those CEOs got an average 46% raise, to $10.4 million, while CEO compensation at a broader swath of companies averaged a 9% jump, to $8.1 million, suggesting that CEOs personally benefit when companies hire cheaper workers abroad. "It's a flashy finding," says Paul Oyer, associate professor of economics at the Stanford Graduate School of Business. "But these are two separate issues, and there's no reason to think they're related." In fact, a 1998 study by University of Illinois at Urbana-Champaign economist Kevin Hallock, published in the American Economic Review, found no causal relationship between layoffs and CEO pay increases, even though the two often happen together.