And in terms of actual value delivered to the business, I doubt that a low/mid-level manager delivers significantly more than an experienced and productive individual contributor.

Organizations need both good managers and good individual contributors. Clearly managers of technical contributors need enough technical experience to make sound management decisions. But that doesn't seem like a good reason to constantly promote people upwards, nor does it seem like a reason to always pay managers more than ICs by default.

However I think in some cases managers end up subject to extra risk if a project goes bad, so they are probably entitled to some increased "hazard pay" for that. (The risk/responsibility structure might be inverted at some toxic dysfunctional organizations, but that's beside the point.)