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Can you handle the truth? Why we prefer “equal” to “fair” — Pop Economics

Can you handle the truth? Why we prefer “equal” to “fair”

by Pop on October 19, 2010

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Not those damn monkeys again.

There’s a certain group of Ivy League primates that must feel like life is a series of tests designed to provoke them.

When we last visited Yale’s community of esteemed Capuchin monkeys, they taught us how deeply our fear of financial losses runs.

Well, a few years ago, Yale professor Laurie Santos wanted to see how the monkeys would respond to a seemingly unfair situation. The monkeys had already been taught to trade pebbles for cucumber slices at a certain rate of exchange.

But one day, the researchers rewarded one of the monkeys grapes in exchange for the pebbles, rather than cucumber slices (monkeys greatly prefer grapes). The rest of the monkeys freaked out, hurling pebbles and cucumber slices out of the chamber. They didn’t want to play anymore.

So what happened? The researchers think the Capuchins were responding to perceived unfairness between them and the monkey who was compensated by grapes. Even though the monkeys had been perfectly happy with the pebbles-for-cucumber trade before, they reacted harshly when it seemed like one monkey got preferential treatment.

That other monkey cage: A college campus

Recently, the salaries of workers at state schools in California became public information due to the “right to know” law. A newspaper, as it’s wont to do, put that information in an easily searchable database, and another professor, as they’re wont to do, decided to measure how the workers reacted to the info.

The researchers informed sets of workers on three college campuses of the newspaper database and later surveyed them about the information they found and how they felt about it.

As you can imagine the workers whose pay was below the median didn’t feel too happy. Their job satisfaction dropped severely, and a number of them said they were now looking for a new job. Workers whose pay was above the median didn’t get a significant morale boost from the new information.

It’s important to note that “logically” the new information shouldn’t have had so dramatic an effect. After all, the workers were apparently satisfied with their pay beforehand. It was the knowledge of how others were being treated that caused the unhappiness.

So do you want to know what your colleagues make?

A recent SmartMoney article concludes that the dissatisfaction and resulting job search is a good thing, since those workers will find better paying jobs elsewhere.

I guess I’m not totally convinced. After all, we don’t really know if the pay gap was due to unfairness or different skill levels. If it was due to different skill levels, those workers might just find that they’re a lower-class of employee, which would be even more depressing than just thinking you were getting short shrift. Unfortunately, I don’t see a way that California public record law could shine light on employee performance in the same way it revealed pay. Public performance reports?

But it makes it worth asking yourself how much you should actually want to know what your colleagues make, as a website like GlassDoor can make possible even for private companies. Or how about that old trick where you and your coworkers anonymously put your salaries in a hat and then spread them out on the table. Sure, the anonymity saves embarrassment, but it does nothing for the tinge of pain you’ll feel if you end up on the low end.

If you’re happy with how you’re compensated, that should be the end of it, right? Unless there’s some reason you need more money, it’s not supposed to matter how much the guy in the cubicle over gets paid. But I’m guessing that’s not going to keep most of us from seeking out the info when it’s available.

How to deal with unequal paychecks

Unionize! (Just kidding.)

So you’ve found out that you get paid less than your coworkers. How do you deal with that information? First, obviously it’s pointless to march into your boss’s office and throw a fit. Although it’s possible that your employer is taking advantage of an informational imbalance and lowballing your salary, it’s also possible that he has reasons for paying that other guy more.

Did he recently come over from a new company? Changing employers or approaching your current one with a new offer is one way to get a significant salary bump, whereas company lifers often just get cost of living wage increases as they age.

The bottom line is that you have to show your employer that you have value and that you’re a threat to leave if you don’t get compensated for that. The knowledge of your coworker’s salary is simply an informational advantage that tells you how high your employer might be able to go, and is not something to actually bring up in the raise negotiation.

While pay inequality might make you mad, your boss just wants to keep his top performers from jumping ship.

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{ 3 comments… read them below or add one }

Lucas October 20, 2010 at 9:30 am

Funny you posted this. Just a few days ago there was a situation in our office where a female coworker (the only reason I bring up female is due to the fact we work in the construction industry which is predominantly male) was venting about the way she perceived she was being treated. We had a very good discussion, but it finally came down to that she didn’t feel she was being compensated fairly. Due to the way our accounting system works, it is fairly easy to find out the salaries of coworkers (I use the term fairly easy, but you have to know what to look for). I compiled the information from our current staff and then staff on other jobs for comparison. The end result was that we had another discussion where I showed her the numbers and she was being more then fairly compensated compared to her coworkers. What did it do to her…it gave her motivation to continue working hard and prevented her from looking for another job. Without the ability to compare her salary with coworkers, we would have most likely lost a very good employee.

Pop October 20, 2010 at 8:45 pm

@Lucas That’s a great story. Just don’t show all those other people how much more she’s making! heh

Terry October 22, 2010 at 11:33 am

Life isn’t fair, get used to it.

When I was in college, I was hired for an on-campus wall-washing crew, which went methodically from building to building over several months, after which I was assigned general janitorial tasks in a specific building.

The building crew consisted of part-time (20 hours) students and full-time non-students who were represented by a union.

The union janitors had great benefit packages (students had none) which included a number of paid holidays (I needed every dollar I earned, and hated holidays because to me they represented a lockout and a lost opportunity to earn money). The college limited student on-campus work hours to 29 per week (this had some connection to union contracts). I loved school breaks because the college let me work 40 hours per week on break. (There was plenty of work to do, as a number of tasks were deferred to school breaks, such as floor care (stripping, buffing, waxing).

To pile on the unfairness of it all, in addition to the great benefits the union janitors enjoyed, their wages were roughly three times what students were paid. And the work was hardly equal: the overpaid union workers got the easier jobs (assigned by the unionized building foreman) like emptying trashcans from offices; while the students got the heavy duty tasks. (I cleaned bathrooms, classrooms, and 600-seat lecture halls – those were astonishingly filthy at the end of the day; the good news is I got a lot of cheap freebies left behind by the students. And yes, I was the lucky ducky who got to do the floor care.)

So what were the student janitors supposed to do? We didn’t unionize and we didn’t go on strike and we didn’t boycott.

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