Wages have little to do with productivity and everything to do with bargaining power. CEOs are paid well because we expect them to be and they can demand it, irrespective of their actual contributions to the success of the company. But for some reason only the worker must justify his pay.

This is self-fulfilling. There is a claim that CEOs are well paid because they're in high demand. The truth is that it's actually difficult to find someone who will work for minimum wage in a In-n-Out burger in San Jose. It's easy to find a dozen qualified candidates for CEO - hell, half of them are CEOs at similar smaller companies and the other half are CxOs/SVPs at the company you're hiring for. The myth is that you need some massive salary to attract the best, whereas what actually happens is you hire who you would've hired anyway, but you pay them a massive premium.

> The myth is that you need some massive salary to attract the best, whereas what actually happens is you hire who you would've hired anyway, but you pay them a massive premium.

Microsoft’s market capitalization has more than doubled during Satya Nadella’s tenure as CEO. When Steve Ballmet quit as CEO the market cap jumped over $100 million. That kind of difference is why companies pay extremely well for top CEO talent. Management is a skill, some people are really great at managing large, complex, profitable organizations and they’re worth a lot of money.

My takeaway is that Steve Ballmer was paid million of dollars despite being worth negative $100m to MSFT.

CEOs are broadly speaking benchmarked on return on equity for investors. They receive high salaries in anticipation of their doing a good job, and if they don't they're removed. Further, a disproportionate amount of their compensation is equity based to align their incentives. I'm not saying it's right or wrong, just that they are expected to justify their pay too.

> They receive high salaries in anticipation of their doing a good job, and if they don't they're removed.

When they get removed, they often receive golden parachutes even if they seriously effed up the company.

This can't be explained by return on equity. I guess it can be explained by bargaining power or cronyism, or perhaps other things I'm not thinking of.

I won't claim the system isn't corrupt at all... but if you were taking a job where the expectations were ridiculously high and there was a pretty chance you'd get fired possibly for things outside of your control, and in a way that would end your career because your failure would be so public if you screwed up, wouldn't you demand the golden parachute as insurance?

True often the golden parachutes are way too high compared to realistic performance bonuses. But if you think of that as insurance - the board and the CEO both know this is risky, so they negotiate a fixed golden parachute just in case it doesn't work out - otherwise why would someone who wouldn't get fired take the job, since they wouldn't want to risk the downside?

CEO wage depends on company size: big companies are willing to pay A LOT for a CEO which screws up with 1% less chance. Other jobs (be it janitor, software engineer) don't scale up as much with company size, since the single tasks remain the same.

So a big reason CEO wages grew is that companies became massive.

> CEOs work isn't any more demanding than it used to be, either.

I think it has, actually. The CEO's job became more complicated as a result of the increased complexity in the world. There used to be only brick-and-mortar and mail order, now there is internet. They used to advertise on tv, radio, and newspaper. Now they can advertise tv, radio, newspaper, online ads, and social media influencers. They didn't have to worry about ransomware, now they do. And so on.

It’s more complex but I would say the job itself is actually easier. I think managing a company with letters, written notes, and phone calls would be much more challenging.

Has it gotten 10x harder? Was running the vast agglomeration of companies that was ITT really less difficult than running today's sprawling companies? Do you think the CEOs of today's companies get into the nitty gritty of all of those issues you talk about, or do they, as always, delegate the real work of understanding those issues to their subordinates?

Setting direction for others has always been the job, and the difficulty of that can vary.

If we measure a CEO’s job difficulty based on how many years a typical company in their industry can safely operate while stagnating, then the job has become many times more difficult in the last 40 years in some industries. In others, perhaps only twice as difficult.

That is not to say that salaries should stay high, but we would look for reduction to come from systemic productivity gains in management that have come to other white collar professions: software, more efficient management hierarchies, cultural changes in communication, etc.

I’m not sure it can be quantified except perhaps by something like “amount of money necessary to motivate a sufficiently skilled person to do this job.”

I’m certain that they delegate those issues to subordinates; do you feel that there is skill involved in managing and supervising subordinates, and melding their disparate opinions into a coherent and profitable direction for the company?

I'd say that "pushing a broom" is a straw-man of a job that doesn't actually exist anymore, if it ever did.

There are many millions of busses to drive, bags to load, passengers to drive around, trash bins to empty, and floors to be swept, vacuumed, and mopped. I think perhaps you underestimate the massive size of the unskilled job market.

0 of those jobs consist of solely "pushing a broom," which as a phrase dehumanizes and strips "unskilled" workers of their dignity.

Busses are definitely a specific skill requiring specific certification. I don't know if dedicated bag loaders exist these days but everyone has other job requirements. While yes, the market for low skill jobs is large, I think you're still diminishing these roles.

I see a lot of this on HN and it’s disappointing. Place can be a bit too steeped in privilege and survivorship bias at times.

Bus drivers are not making MW anywhere.

And they require skills. Which puts them firmly out of the mindless, worthless, broom pushing category that was being constructed here.

Tell your CEO to do janitorial work for a day and ask them how qualified they felt to do unskilled work.