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At my company all of the above is true but your annual bonus doubles too. So probably another $8-10k. Also, a lot of people are driven more by the status of the title, better cube placement, the satisfaction of getting to give other people orders, etc. Finally, spending several years at the manager level is a necessary step if you want to have a chance to make it to director, where you get another raise, bonus doubles again, and you get an office.
Upper management figured that they don’t have to pay. Also sometime push more long term incentives for managers as well
People accept it because they think the title opens doors for the next job. And to be fair, it certainly can. But that doesn't make the current arrangement any less of a raw deal.