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)
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.