>"managers are being paid in non-pecuniary status benefits via underpaying their underlings, in a way that reduces total firm output, and there are coordination

>"managers are being paid in non-pecuniary status benefits via underpaying their underlings, in a way that reduces total firm output, and there are coordination & principal/agent problems in getting management to agree not to be compensated in this way" That may be true, but managers are also paid in a way that hurts them directly if they reduce the firm's value like that (options, equity). So then it becomes a question of which effect dominates, and it seems like a highly extraordinary claim to say that the "non-pecuniary status benefit" comes out on top. Perhaps there's a systematic bias that causes managers to think they're maximizing value by underpaying workers, even if they aren't really.