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It's just basic supply and demand. Top paying jobs like CEO are top paying because the supply of trusted people, who boards are willing to hand control over bi

It's just basic supply and demand. Top paying jobs like CEO are top paying because the supply of trusted people, who boards are willing to hand control over billions of assets to, is vanishingly small. Programming jobs are reasonably well paying because businesses are careful about who they hand their code over to, although not the extreme degree of CEO. And something like fry cook is low paying because those businesses are willing to hire just about anyone. But we cannot completely discount the effects of desirability. If your employment options are fry cook or oil rig worker, most people would prefer fry cook and thus oil rig worker has considerably higher wages due to the aversion to the job, and therefore reduction in supply at the price point of fry cook. Of course, increased compensation can prompt people to look in alternative directions.

learc83 8y ago
It's not just basic supply and demand though. There are many other factors driving up CEO pay. 1. CEO pay at public companies is public, so they feel the need to keep up with other companies. 2. The incestuous relationship between CEOs and the boards of directors that set their pay. CEO compensation isn't tied to performance.
- randomdata 8y ago
  > 1. CEO pay at public companies is public, so they feel the need to keep up with other companies. That's just basic supply and demand. Since pay is public, people know how much the other party will balk at, affecting the supply. > 2. The incestuous relationship between CEOs and the boards of directors that set their pay. That's just basic supply and demand. Like I said, the people who have that kind of relationship are vanishingly small. > CEO compensation isn't tied to performance. There is no pay that is truly tied to performance. Just basic supply and demand.
  - ItsMe000001 8y ago
    CEO pay is not just supply and demand. You cannot even tell what "supply" even is, because "CEO supply" is nothing that can be well defined. You could make a lot of people CEO from the 2nd and 3rd ranks who also have the experience and knowledge, or you can seek only people who already have been CEOs - which does not guarantee anything at all, because CEO success depends a lot on context and circumstances. CEO supply is extremely flexible based on psychology for one (who you are willing to accept for the role is extremely subjective and based on personal preferences), and can also very easily be changed through actions (whom do you give a chance to learn to lead, and how). So the possible "supply" of CEOs is decided on a whim to a large degree, based on subjectivity (even if it's attempted to be hidden by some "thorough search" - which uses those same subjective criteria and selection heuristics). You misuse economic theory by simply using it to make unsubstantiatable claims pretending that it somehow proves anything as long as you use the right magic words from economic thinking.
    - randomdata 8y ago
      > You cannot even tell what "supply" even is It’s pretty easy to figure out. Typically there will be exactly one person the board is willing to trust. It doesn’t matter how they reached that conclusion. Being the only person in the world deemed suitable for the task gives incredible leverage when demand is near infinite. > You misuse economic theory by simply using it to make unsubstantiatable claims It would appear that you’re simply overthinking this. We’re talking about basic supply and demand, not a complex economic theory. It is simply an observation of what people agree to. We call it basic because it doesn’t represent anything more.
      - ItsMe000001 8y ago
        > We’re talking about basic supply and demand I refer to what was written above. The only "thinking" I can see on your side is how to prolong a non-argument - you just throw out random stuff, going for quantity and endless repetition, but there is not a coherent recognizable thought. Nice try, but I'd say after your first reply it turned into trolling. You are pretty good at saying a lot without saying anything at all though, I give you that much.
        randomdata 8y ago
        If you don't understand my explanation you are welcome to ask questions. I also encourage you to refer to other sources on the internet that go into more detail that I ever could in a short comment. You don't have to assume someone is a troll just because a comment isn't perfectly eloquent.
  - learc83 8y ago
    CEO pay isn't "basic supply and demand" unless you generalize the concept to such an extent that it becomes worthless. Board Member: "Why are you paying your brother $500k to be your assistant?. Surely an assistant shouldn't make that much money." CEO: "I really want my brother to do it, and since I only have 1 brother it's just basic supply and demand." You can basically frame any human interaction in terms of supply and demand, but it's not really useful to do so. And it's certainly not what most of us have in mind when we talk about "basic supply and demand".
    - randomdata 8y ago
      > unless you generalize the concept to such an extent that it becomes worthless. Worthless in what way? Supply and demand is far easier to write than this long-winded explanation I have ended up giving to explain what it means. That seems well worthwhile, at least when in company who understand the meaning of the term. It is not like it is some grand unified theory of economics, if that is what you were hoping for. > You can basically frame any human interaction in terms of supply and demand Absolutely. All interaction has some cost, and supply and demand observes the willingness of all parties to accept that cost. That is exactly what supply and demand is all about. > And it's certainly not what most of us have in mind when we talk about "basic supply and demand" What is it that most of you have in mind? Supply, by definition, is the quantity of a product available at any price. Demand, by definition, is the desire and willingness to pay a price. Supply and demand is simply the observation of both and how they interact with each other. I am honestly unsure of what else you could think it means?

learc83 8y ago

It's not just basic supply and demand though. There are many other factors driving up CEO pay. 1. CEO pay at public companies is public, so they feel the need to keep up with other companies. 2. The incestuous relationship between CEOs and the boards of directors that set their pay. CEO compensation isn't tied to performance.

randomdata 8y ago
> 1. CEO pay at public companies is public, so they feel the need to keep up with other companies. That's just basic supply and demand. Since pay is public, people know how much the other party will balk at, affecting the supply. > 2. The incestuous relationship between CEOs and the boards of directors that set their pay. That's just basic supply and demand. Like I said, the people who have that kind of relationship are vanishingly small. > CEO compensation isn't tied to performance. There is no pay that is truly tied to performance. Just basic supply and demand.
- ItsMe000001 8y ago
  CEO pay is not just supply and demand. You cannot even tell what "supply" even is, because "CEO supply" is nothing that can be well defined. You could make a lot of people CEO from the 2nd and 3rd ranks who also have the experience and knowledge, or you can seek only people who already have been CEOs - which does not guarantee anything at all, because CEO success depends a lot on context and circumstances. CEO supply is extremely flexible based on psychology for one (who you are willing to accept for the role is extremely subjective and based on personal preferences), and can also very easily be changed through actions (whom do you give a chance to learn to lead, and how). So the possible "supply" of CEOs is decided on a whim to a large degree, based on subjectivity (even if it's attempted to be hidden by some "thorough search" - which uses those same subjective criteria and selection heuristics). You misuse economic theory by simply using it to make unsubstantiatable claims pretending that it somehow proves anything as long as you use the right magic words from economic thinking.
  - randomdata 8y ago
    > You cannot even tell what "supply" even is It’s pretty easy to figure out. Typically there will be exactly one person the board is willing to trust. It doesn’t matter how they reached that conclusion. Being the only person in the world deemed suitable for the task gives incredible leverage when demand is near infinite. > You misuse economic theory by simply using it to make unsubstantiatable claims It would appear that you’re simply overthinking this. We’re talking about basic supply and demand, not a complex economic theory. It is simply an observation of what people agree to. We call it basic because it doesn’t represent anything more.
    - ItsMe000001 8y ago
      > We’re talking about basic supply and demand I refer to what was written above. The only "thinking" I can see on your side is how to prolong a non-argument - you just throw out random stuff, going for quantity and endless repetition, but there is not a coherent recognizable thought. Nice try, but I'd say after your first reply it turned into trolling. You are pretty good at saying a lot without saying anything at all though, I give you that much.
      - randomdata 8y ago
        If you don't understand my explanation you are welcome to ask questions. I also encourage you to refer to other sources on the internet that go into more detail that I ever could in a short comment. You don't have to assume someone is a troll just because a comment isn't perfectly eloquent.
- learc83 8y ago
  CEO pay isn't "basic supply and demand" unless you generalize the concept to such an extent that it becomes worthless. Board Member: "Why are you paying your brother $500k to be your assistant?. Surely an assistant shouldn't make that much money." CEO: "I really want my brother to do it, and since I only have 1 brother it's just basic supply and demand." You can basically frame any human interaction in terms of supply and demand, but it's not really useful to do so. And it's certainly not what most of us have in mind when we talk about "basic supply and demand".
  - randomdata 8y ago
    > unless you generalize the concept to such an extent that it becomes worthless. Worthless in what way? Supply and demand is far easier to write than this long-winded explanation I have ended up giving to explain what it means. That seems well worthwhile, at least when in company who understand the meaning of the term. It is not like it is some grand unified theory of economics, if that is what you were hoping for. > You can basically frame any human interaction in terms of supply and demand Absolutely. All interaction has some cost, and supply and demand observes the willingness of all parties to accept that cost. That is exactly what supply and demand is all about. > And it's certainly not what most of us have in mind when we talk about "basic supply and demand" What is it that most of you have in mind? Supply, by definition, is the quantity of a product available at any price. Demand, by definition, is the desire and willingness to pay a price. Supply and demand is simply the observation of both and how they interact with each other. I am honestly unsure of what else you could think it means?