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Wages aren’t a distribution thing, they’re a supply one

Summary:
The High Pay Centre has its annual whine about how much CEOs get paid. As part of which they say the following:Luke Hildyard, director of the High Pay Centre, said: “These figures will raise concern about the governance of big businesses and whether major employers are distributing pay in a way that rewards the contribution of different workers fairly.But wages aren’t a distribution thing, they’re a supply one. Given the complaints about the government currently - vaccines, track and trace, PPE and so on - it shouldn’t be difficult to grasp the idea that competence in managing large and complex organisations is scarce. Both scarce and valuable in fact. Thus there’s competition to gain access to those with those scarce skills.That is, paying someone more than they can gain for going and

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The High Pay Centre has its annual whine about how much CEOs get paid. As part of which they say the following:

Luke Hildyard, director of the High Pay Centre, said: “These figures will raise concern about the governance of big businesses and whether major employers are distributing pay in a way that rewards the contribution of different workers fairly.

But wages aren’t a distribution thing, they’re a supply one.

Given the complaints about the government currently - vaccines, track and trace, PPE and so on - it shouldn’t be difficult to grasp the idea that competence in managing large and complex organisations is scarce. Both scarce and valuable in fact. Thus there’s competition to gain access to those with those scarce skills.

That is, paying someone more than they can gain for going and working elsewhere. The entire race and game is about accessing the supply of those rare and valuable skills. As is also true of all the other skills, talents, labour and so on that make up the rest of the labour supply to those very same organisations.

To talk about the “distribution” of wages in a company is to be looking at the problem through the wrong end of the telescope.

This before we get to the point that it is, after all, the shareholders’ money and who the heck is Luke Hildyard to tell them how they must dispose of their own property?

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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