The problem is not that. It's this: the people at the top get first dibs on the money coming in. So guess who they are going to pay first? When you have a large company with a lot of workers, who do you think decides and controls how the profits get distributed? If the company makes more money , do you think there is going to be a huge incentive to distribute that extra wealth to the workers who are actually doing the work on the factory floor? No. The CEO and the shareholders and the board just divvy it up amongst themselves. I bet if you gave first dibs on how to distribute the profits to the workers and let them decide how the increasing profits were going to get divvied up, it would be far less disparity. Of course, the workers would still have incentive to pay for a good, competent CEO to run the place. You would want to generously compensate shareholders so they continue to invest. Otherwise, the competitors would destroy the company and they would all be out of a job. But I am pretty sure you would no longer see this ridiculous level of stagnation of income between the working class and the shareholders/CEOs, and such ridiculous disparities in income between workers and management, all go away.
It's all about who gets their hands on the money first.
Let's keep going with this.
Did you know that if workers were to be paid in equity like the big dogs are, that this pay would likely be in the form of an option, which is the ability to purchase shares of stock in the company at a discounted price? Did you also know that options typically can't be liquidated for cash until after a predetermined vesting period, typically something like three or four years? So if you quit or are fired within a probationary period of time (6 months or a year, typically), you're entitled to nothing. Imagine the wrongful termination lawsuits if ordinary workers got fired and lost the ability to exercise their option. People especially at lower ends of the wage spectrum also like to job-hop, look for something better or start climbing the ladder. People with options offers typically feel like they can't or shouldn't do this (sometimes called "golden handcuffs") because they're holding out in hopes of a big pay day at the end of a vesting period.
You'd also have fluctuations in the workforce potentially diluting any given employee's payday. If more workers are needed and they're to be promised options too, then all of that potential pay could be all over the map depending on what develops for the company over the next 2-4 years. Even really smart people sometimes have an extremely difficult time accurately valuing what their stock options are worth. Especially if it's a private company, you aren't even able to know where your shares are priced until the next round of equity financing, the number of shares outstanding, and your pecking order of your shares relative to the others on the company's balance sheet.
Look at what moderate-to-highly paid employees who are offered stock options say (Should You Take A Bigger Salary Or Employee Stock Options? - Forbes - by William Baldwin) about trying to valuate their offer and negotiate their position. "It's a black hole," they say in this linked article (which I also paraphrase/borderline plagiarize in the above paragraphs). They stick around in hopes it will pay off big. In some cases it does. In other cases it doesn't, or at least not to the degree some hoped. Some businesses tank and the profits/promises disappear.
Now try to translate all that to, say, oh I dunno, a 22-year old who accepts a job as a customer service representative for The Home Depot's online ordering system, earning $12.50 per hour. How are you going to design an equity pay package for this type of worker? Let alone for the thousands, tens of thousands, or in some cases hundreds of thousands or more employees that large companies have?
It's delusional fantasy to go any further with this petulant clamor for front line employees to be paid from profit/equity. It just doesn't even make sense. You might as well just call for the abolition of private property. Because it's loony tunes.
When you lower your cost of living, yeah, you're generally improving your standard of living. When I can buy the same coffee at walmart for half or two thirds the price, I can then take that excess money and spend it on something else, or save and investment.
