4 ms·

We don’t adjust salary for what proportions people manage or are responsible for in a lot of other fields, at least not to the same extend. And especially if we

We don’t adjust salary for what proportions people manage or are responsible for in a lot of other fields, at least not to the same extend. And especially if we would go by responsibility. I earn about 3 times as much as the average school teacher in my home town and about 4 times as much as the people driving the buses there while I sit in front of my screen and fix irrelevant css bugs or spin up the next semi-useful microservice for a cross financed project that nobody really cares about except and that doesn’t really help anybody. Their responsibility and utility is much greater than mine. If they fuck up it has much larger and potentially grave consequences. If I fuck up there will be a Jira ticket and a semi-interested PM who will assign it to me 3 weeks down the line. Furthermore this relation does not automatically imply fairness. And on the outside it also appears very asymmetric in personal risk. A megacorp CEO might tank the entire company and can often still walk away with millions. So if we wanted a “fairness” optimized solution then maybe it should take into account the public utility, difficulty of the job, amount of work required and personal risk. And maybe, (just maybe) we don’t need anyone being arbitrarily wealthy and having more assets than some developing countries.

conradev 3y ago
I think it is a misunderstanding that the job market is optimizing for fairness: it is not. Executive pay is supply and demand. The mayor is being paid $450k because a person with the necessary skills was willing to take that salary (after fighting off opponents) to become mayor. Mayor comes with prestige, so more people want to be mayor, and $450k is not a terrible incentive to go after. If the government paid $80k a year, no one would become mayor. If they paid $1m a year, too many qualified people might be interested, or – the right people might become interested. Imagine you’re a CEO who successfully ran and sold a business for $250m. You now have at least $25m. Why would you ever want to work an intense job again? Being CEO is exhausting. Executives are paid a lot of money because they’ve already made a lot of money: if you want to incentivize them there has to actually be something at stake. That said, these decisions are usually made by a board, which is small and has limited knowledge. There is plenty of room for them to miscalibrate, too, but paying too much for an executive is bad business. Paying too little is, too.
- ceejayoz 3y ago
  > If the government paid $80k a year, no one would become mayor. I very much doubt this. New Hampshire legislators get $100/year, since 1889. Still plenty interested in the job.
  - conradev 3y ago
    Yeah, I would do public service for free, personally, but I have the means to. It’s an interesting filter to pay nothing, for sure! At that point, it is filtering for people who can afford their own lifestyles without a job
- Jensson 3y ago
  > That said, these decisions are usually made by a board, which is small and has limited knowledge. The board is usually made up of other executives or former executives. This group sets each others salaries unlike all other professional categories.
  - denton-scratch 3y ago
    As far as I can tell, CEO remunerations are determined by "the going rate"; and the directors on the remuneration committee are fine with that, because they're also CEOs for some other firm, or hope to be. So the going rate goes up, up, up. Now, here in the UK, the remuneration of University heads (Principal, Master, Dean, or whatever title) are having their pay determined by the going rate for CEOs. These are people who do the job for a couple of days a week; they aren't exactly struggling to get on top of the workload. Same for the bosses of the jungle of pseudo-companies that make up the modern NHS; they're all basically employed by the taxpayer. They've employed so many managers that their organizations are hopelessly top-heavy, and yet they need huge remuneration. Can they not delegate? I thought the ability to delegate was an essential skill for any manager.
- vkou 3y ago
  If executive pay is supply and demand, and has risen stratospherically over the past 40 years, why has the supply of executives failed to meet demand for them? Are we not sending enough people to MBA school? Is there a funnel problem in our educational system? Do we need to open up more opportunities for skilled immigrants to work here in executive roles?

conradev 3y ago

I think it is a misunderstanding that the job market is optimizing for fairness: it is not. Executive pay is supply and demand. The mayor is being paid $450k because a person with the necessary skills was willing to take that salary (after fighting off opponents) to become mayor. Mayor comes with prestige, so more people want to be mayor, and $450k is not a terrible incentive to go after. If the government paid $80k a year, no one would become mayor. If they paid $1m a year, too many qualified people might be interested, or – the right people might become interested. Imagine you’re a CEO who successfully ran and sold a business for $250m. You now have at least $25m. Why would you ever want to work an intense job again? Being CEO is exhausting. Executives are paid a lot of money because they’ve already made a lot of money: if you want to incentivize them there has to actually be something at stake. That said, these decisions are usually made by a board, which is small and has limited knowledge. There is plenty of room for them to miscalibrate, too, but paying too much for an executive is bad business. Paying too little is, too.

ceejayoz 3y ago
> If the government paid $80k a year, no one would become mayor. I very much doubt this. New Hampshire legislators get $100/year, since 1889. Still plenty interested in the job.
- conradev 3y ago
  Yeah, I would do public service for free, personally, but I have the means to. It’s an interesting filter to pay nothing, for sure! At that point, it is filtering for people who can afford their own lifestyles without a job
Jensson 3y ago
> That said, these decisions are usually made by a board, which is small and has limited knowledge. The board is usually made up of other executives or former executives. This group sets each others salaries unlike all other professional categories.
- denton-scratch 3y ago
  As far as I can tell, CEO remunerations are determined by "the going rate"; and the directors on the remuneration committee are fine with that, because they're also CEOs for some other firm, or hope to be. So the going rate goes up, up, up. Now, here in the UK, the remuneration of University heads (Principal, Master, Dean, or whatever title) are having their pay determined by the going rate for CEOs. These are people who do the job for a couple of days a week; they aren't exactly struggling to get on top of the workload. Same for the bosses of the jungle of pseudo-companies that make up the modern NHS; they're all basically employed by the taxpayer. They've employed so many managers that their organizations are hopelessly top-heavy, and yet they need huge remuneration. Can they not delegate? I thought the ability to delegate was an essential skill for any manager.
vkou 3y ago
If executive pay is supply and demand, and has risen stratospherically over the past 40 years, why has the supply of executives failed to meet demand for them? Are we not sending enough people to MBA school? Is there a funnel problem in our educational system? Do we need to open up more opportunities for skilled immigrants to work here in executive roles?