this post was submitted on 06 Dec 2024
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Mildly Infuriating
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It's not an absolute, it's just an incentive. Talent is also an intangible, it cannot really be measured. Nor does high pay in some way guarantee you will get a talented or qualified person for your position, it just gives you better odds. It's bait, basically, but you cannot guarantee your bait will work to attract what you want.
I'm not sure of any evidence, I'm not an economist. I'm discussing the theory of how capitalist systems are intended to function. How well they succeed at this is very messy and muddled at best.
Lastly, I actually disagree that our hypothetical construction person makes less because they are less talented. It's that their skill is in lower demand. They could be extremely talented, but there are simply more of them available, so less needs to be offered to attract them.
Convenient the C-Suite sticks to a theory that massively benefits themselves. Sorry, it’s bullshit.
And there is ample evidence. Look no further than how every other employee is treated. Do you think they could get the best veterinarians by paying say, $300,000/year? Of course. But they don’t because they recognize the diminishing returns of thinking they have to have the best. But somehow the C-suite makes itself immune.
And that goes back to your example. As an engineer, I can tell you that construction trades are in HUGE demand. Same with civil engineers. Yet pay isn’t going up, at least not much.
Executive pay has gone up far faster than pay for regular workers. Sorry, I don’t buy the explanation that somehow they are the only group struggling to to find top candidates.
The CEO does not set his own compensation. He is hired by the owners of whatever company to operate it for them. They ultimately determine the compensation.
I agree there's no struggle to find top candidates, that's for sure. That's partly because the compensation tends to be very good. The trades, which do not compensate as well as a chief executive, are struggling more. If plumbers frequently pulled CEO pay, we would not have a shortage.
Other CEOs that sit on governing boards set the compensation. It’s the same thing.
Sorry, I’ll never buy that it’s fair compensation, especially for a nonprofit charity.
I never said it was fair, don't get me wrong. How it got this way vs whether that's a good idea or not are two totally separate topics.
I'm not sure that most boards of directors are full of CEOs either. It is full of rich people though.