Yes this is obviously true. If the pay is low and you’re poor you’ll go elsewhere if you can. But my point is those rich people stay in that field even tho the pay is low, because they like the work. I suspect most CEOs would stay in their job if you cut all CEO pay by 1/10th, not that doing that would make their job low paid. As long as you did it across the board, instead of just at one company. My evidence for this? In 1985 ceo pay was 30x the average worker. In 2015 it was 271x. That’s a 9x increase. And yet in the entire period from 1985 to 2015 there were plenty of people seeking the job of CEOs.
You’re telling yourself a free market capitalism just-so-story. This is the way it is, therefor this is the way it must be. But there are plenty of non-free-market forces that push ceo salaries higher. Monopolization is a big one. Tax code is another one (stock grants as pay pushed rates up), etc.
There are obviously non-free-market forces that affect compensation but none of them work by considering the individual; they all start by considering the position and the market for the position.
The number of people looking for the position is also a meaningless metric. Go anywhere on the internet and you can find people who are desperate to get software engineering jobs and yet somehow compensation keeps going up. Only the availability of qualified candidates and the competition for them matters.
> There are obviously non-free-market forces that affect compensation but none of them work by considering the individual; they all start by considering the position and the market for the position.
Free market does NOT apply when you consider the individual. Considering the individual, there is no free market value to Tim Cook, because Tim Cook has a monopoly on Tim Cook. A monopoly is not a free market. Which is, of course, why he can ask for 100M/year in compensation... but it's not necessarily a good reason for anyone to pay that amount.
Anyway, all of this is academic. I'll be voting with my shares to block the pay hike, but that position will almost definitely lose.
If you cut the max pay of doctors to $50K/yr, in 20 years, you’d have a lot fewer high-achieving students going into medicine and doing something else (law, engineering, etc)
The arts sector has a higher proportion of people with wealth because it doesn't pay very much, not the other way around. i.e. they are the only people with the required educational background who can afford to take those jobs. It's not like the arts organizations are trying to figure out who to employ and say "hmm, if we decide to have low pay, we can recruit a bunch of trust-funders and spouses of investment bankers".
By and large, it doesn't matter what your personal situation is when the market sets pay for a position. The comp package for a staff software engineer in SV is X, and it's not going to be X * 0.5 because the employee has a trust fund or X * 2 because the employee has seventeen children, five of which have expensive medical conditions.
The whole reason that boards have compensation committees is to figure out what the "right" level of executive pay is. It doesn't matter who is in that seat. If Apple decides to pay Tim Cook only $1, then what kind of a signal are they sending to the people who might replace him? Instead the board is going to set reasonable, market pay and if Tim Cook wants to give it all away through philanthropy, or even waive the entire package (i.e. taking all but $1), then that's up to him.