My intuition for this is leverage. As a people manager, the team's output is your output. When you manage a large team, small changes in IC output can quickly exceed 1 FTE. These multiplicative productivity improvements are why Managers get paid more.

There's tons of ink spilled on the idea of the 10x engineer. Let's assume that exists. Even if an extraordinary single person can deliver 10x output (call that 10FTE), a good manager can deliver a similar productivity boost by merely 2x'ing the output of a 10-person team of average ICs (10FTE output -> 20FTE output for a delta of 10FTE, same as hiring a 10x engineer, which is hard to do.)

If you have a 10 person team of 10x engineers, a good manager can deliver that 10FTE bump by increasing team performance by just 0.1x (10x 10FTE/person = 100FTE -> 10 x 11FTE/person = 110FTE team output, for a 10FTE boost). THAT is why good managers are worth paying.

Don't sell yourself out for money unless you need to. Figure out the amount of money you would like to make then if your at not getting paid that at CurrentCo go find a darling SV company, unicorn, or a FAANG+Microsoft and switch to an IC role at one of those companies and get paid better.

Going into management for money is a terrible reason to become a manager...

Unless of course your goal is executive management... but that's very different from engineering management.

I agree, and I think you should only go into management if you like managing. You can be a good IC and a good leader and a good manager, but more than likely you will be better at one or two out of those three.

You're sort of arguing though that, if you don't want to go into management, you should become an extraordinary IC (or just accept you'll get paid less money).

But that's true almost everywhere unless you become a consultant/freelancer (but then you are now running a business and have to find customers)

Sure. Absolutely nothing specific to tech. In fact, many big tech companies have a much better IC career ladder, mostly but not entirely for engineers/devs, than non-tech companies do. Sales is the main exception I can think of.