I think the big issue seems to be that a lot of companies see the only progression (at least if you want your pay to increase by more than a cost of living increase) to be: Grunt worker -> Knowledge worker -> Team supervisor -> Manager -> Cxx...

The problem, as others have pointed out, is that not every techie type person is suitable to be a manager (ME!) and not every manager is suitable to manage techies. My last job, shortly before I left at a review, I was told that the next pay level was a "manager" rate. I *once* was made a supervisor and neither liked the job, nor do I feel I did well at it (although some of that may have also been a lack of direction from my manager and a lack of "what can I or can't I do")

I got bumped back (thankfully there was no difference in pay, so no worries about pay being cut) to being a techie.

As for managers being paid less than the techies, I would think that if an employer actually treated the techie side and manager side as two completely different career tracks, it wouldn't matter. They would pay the manager what they feel they're worth, and the techies what they feel they're worth. If a techie feels they want to move to the manager side of the fence, then the employer should provide a path for that to happen. Make them a "team lead" sort of position, where they're still in the techie side some, but spend more time providing direction to the other techies. Sort of a "go-between" between the manager and the techies. If things work well and the techie/manager wants to keep moving towards manager, let them...