> Best case people find out that people are getting paid rapidly different amounts for the same job, get angry, and leave.
This is only a problem if the disparity does not match the difference in contribution. I'm sure most of us have been in situations where ourselves and two other people have the same job and are earning roughly the same, and we perceive the situation as massively unfair because one of them should be earning half as much, and the other twice as much. I've been in teams where I would have been perfectly ok with specific people earning twice as much as myself. It's ok to admire someone's skill, be motivated to reach it, and accept that they should earn more in the meantime.
In practice ego makes truly merit-based compensation impossible to implement. We just often think too highly of ourselves. The other obstacle is that the difference in contribution from a low-performer to a high-performer varies widely with profession, with software development being (in my opinion) one of the widest.
This is true in theory. In practice, most managers either do not understand what "performing well" for an engineer means, or willfully go against what they know to be true due to internal incentive structures. For example, favoring those whose contributions are more visible in the short-term, even if net negative over time. Through such a lens, someone who is competent at executing a longer term vision, or refuses to do only those tasks that are visible, is a low performer.
I don't say this to bash your statement, I agree with you in principle. Just useful to keep in mind that the context matters. Sometimes, the people complaining about having to compensate for the low performer, are the actual low performers.
This is only a problem if the disparity does not match the difference in contribution. I'm sure most of us have been in situations where ourselves and two other people have the same job and are earning roughly the same, and we perceive the situation as massively unfair because one of them should be earning half as much, and the other twice as much. I've been in teams where I would have been perfectly ok with specific people earning twice as much as myself. It's ok to admire someone's skill, be motivated to reach it, and accept that they should earn more in the meantime.
In practice ego makes truly merit-based compensation impossible to implement. We just often think too highly of ourselves. The other obstacle is that the difference in contribution from a low-performer to a high-performer varies widely with profession, with software development being (in my opinion) one of the widest.