How can the pay gap fluctuate so wildly in the last twenty years? I imagine compensation packages tied to the stock market drives some of that, but some of it seems pretty huge (376 -> 188 -> 345 -> 195 -> 303x.)
My question, out of curiosity, would be, if lowering compensation for top execs would not lower productivity (as the article predicts), why isn't it done then?
Think about it, CEO pay is determined by the company board. Those boards are made up of people who are often CEOs or former CEOs (look at the board of Apple for example 6 of 7 are CEO's or former CEOs) In other words you have a situation where a relatively small group of people are determining their own pay.
What do you think would happen to engineer pay if compensation were determined by a vote of a group of peers and you knew that the person who's pay you were voting on today might well be among the group of people determining your pay tomorrow. Personally I would always vote to increase pay by as large a number as I could possibly justify with a straight face.
That's a good point I hadn't thought about. So it's governed by game theory moreso than by market forces, i.e. even if candidate1 is not a great candidate, she's the best candidate available and we can get in our industry niche.
Perhaps a movement could be begun where companies use low ceo/worker multiplier as a marketing tool to highlight how pro-staff they are and by extension how pro-consumer they are.
My question, out of curiosity, would be, if lowering compensation for top execs would not lower productivity (as the article predicts), why isn't it done then?