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Consumer Discretionary: pay and profit in the S&P 500

The widest pay gaps in the S&P 500 are here, and so is the lowest median worker pay. Both facts have the same cause, and it is not executive compensation.

Consumer Discretionary has the widest median pay ratio of any sector at 455:1, more than twice the index median of 196:1, and the lowest median worker pay at $37,371. It contains retailers, restaurant groups, hotels, cruise lines, homebuilders and carmakers, and it is where the index's most quoted pay ratios live.

Why the ratios are so wide

Not because chief executives here are paid more than elsewhere. In absolute terms they are generally paid less than their peers in technology or health care. Starbucks tops the entire S&P 500 at 3,669:1 on a three-year average CEO compensation of $63.4 million, which is high, but Ross Stores reaches 3,225:1 on $32.4 million, an entirely ordinary package for a company of its size.

The cause is the denominator. This sector employs enormous numbers of part-time and seasonal workers, and the pay-ratio rule counts them all:

A median of $17,279 across Starbucks's 381,000 employees is not an hourly rate. It is what the midpoint of that workforce actually received over the year, and the midpoint works part-time. The same applies at TJX, Chipotle and McDonald's. This is a genuine and consequential fact about how these businesses are structured, but it is a different claim from "a typical full-time employee earns $17,279."

Aptiv is the outlier in kind rather than degree: an auto-parts manufacturer whose $10,162 median comes from a production workforce concentrated in Mexico and Eastern Europe, the same offshore-manufacturing pattern seen across the technology sector's hardware companies.

The narrow end, and why it is misleading

The sector's smallest ratios are almost all artefacts.

Airbnb reports 1:1, on a median of $235,416, the highest in the sector by a wide margin, since the company employs 8,200 technology staff and no hotel workers. Its chief executive takes nominal compensation, so the ratio measures nothing.

Amazon at 42:1 is the most instructive case in the sector. Its median of $40,206 is unremarkable for retail, but its CEO compensation averages just $1.7 million because Andy Jassy received a very large multi-year grant on appointment and has had no significant grant since. The narrow ratio reflects grant timing, not restraint. This pattern recurs across the index.

DoorDash at 10:1 and NVR at 23:1 are different again. NVR is the sector's cleanest example of genuine restraint: a homebuilder paying a median of $88,431 with CEO compensation averaging $2.0 million.

Pay against profit

The sector's median profit per employee is $31,633, the lowest of any industry in the index. That changes the interpretation of everything above.

Restaurants and retailers generate very little profit per worker, with Darden at $5,455 and DoorDash at $5,414, Kroger's peers in staples similarly thin. So although these companies pay badly and have the widest pay gaps, their workers capture a relatively large share of a small surplus. On Fair500's second measure they score better than their ratios suggest.

The opposite holds for the homebuilders and asset-light operators at the top of the sector's profit-per-employee list: PulteGroup at $404,242, D.R. Horton at $304,023, Airbnb at $404,878, Tesla at $297,586. These generate substantial profit per head, and the share reaching workers is correspondingly smaller.

Amazon dominates the sector's absolute profit at $55.8 billion, more than the next three companies combined, across 1,576,000 employees, the largest workforce in the index.

Every consumer discretionary company in the S&P 500

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