I've heard this theory again and again and as someone who works in a (non-tech) industry where it is the norm for people at the bottom to work very hard for very little,while the bosses travel the world and live in huge beautiful homes, this does NOT seem to be the case in reality. Myself and my colleagues find it hard not to become bitter about it and to stay motivated to work hard. I only graduated 6 months ago but about half of my class has already become so discouraged by this system that they are thinking about - or already have- switched careers.

On the other hand, in my previous job the boss paid us As much as he could afford to ($17/hr, not bad for retail) and in his life was by no means rich at all. He drives a beat up car and wears second hand clothing. We all respected him so much and felt much more motivated to do well, and also felt like we were an actual part of his company and took it personally how well the company was doing. In my position now, and my colleagues agree, we feel totally cut off from the company and have no interest in how well a collection does (I work in fashion.)

Basically I feel like this theory only works if the CEO is overpaid and the workers are fairly paid. But in the end I think feeling part of a team is better for the company than feeling like you are in a tournament.

I would also like to add that 90k is hardly embarrassingly low. That is quite a comfortable wage that many people will never see in their life.

Your post reminds me of some statistical data I saw a while back that says that Americans have a very poor view on the actual economic status of those around them and the rest of the country.

link: http://blogs.berkeley.edu/2010/09/30/wealth-and-an-american-...

You're right, it only works if you believe in the possibility, i.e., you see your peers get promoted to those positions or start their own lines, etc.

A tech startup analogy is: a company issues an IPO or gets acquired.

You know it's a fairly rare event, and it may not happen to you, but you believe it's possible, so you're motivated to keep going.

An important factor is how much you feel in control of your fate (whether the control is real or imaginary is less important). Tech startups feel it's much more up to their skills and creativity to make it than a lowly employee working for the Man in a big bureaucratic multinational, even if statistically they have about the same chance. It's similar to why most people are more afraid of flying than driving, even though the former is much safer statistically.

I would still prefer not to be in a company that ran economic motivation in this way even if it did encourage my employees. It seems like a bad company culture to be in.

This theory is one of the most self-serving (for overpaid executives) arguments I have ever heard.