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There's Some Bliss in Ignorance of Pay Gaps, Study of College Employees Suggests

A new study of employees at three University of California campuses suggests that letting workers make rough in-house pay comparisons hurts morale over all, by causing unrest among those at the bottom while having little impact on those on top.

Once given a chance to compare their pay with the salaries of others in the same department or occupation, those who fell below the median became less satisfied with their jobs and more likely to be looking for work elsewhere. The closer they were to the bottom, the more unhappy with their jobs they were likely to become, the study found.

Those whose pay was above the median did not seem to be affected one way or the other by the knowledge of how they compared with others, the study found. In a paper summarizing the study, the researchers involved said such a finding challenged the idea that relative pay and job satisfaction always rise in tandem. Under that idea, people should be made happier with their jobs by learning that they earn more than most others do.

The finding that employees' job satisfaction seemed unaffected by the knowledge that they earned more than most colleagues also challenges the idea that people would use information on peer salaries mainly to update their expectations of their future earnings, the paper says. If such had been the case, people who learned their earnings were above the median generally would have experienced a decline in their job satisfaction, because such a revelation would have given them reason to doubt their bargaining position or their prospects for advancement, the paper says.

The study was conducted by three professors of economics at the University of California at Berkeley—David Card, Enrico Moretti, and Emmanuel Saez—and by Alexandre Mas, a professor of economics and public affairs at Princeton University. The National Bureau of Economic Research on Monday published a working paper summarizing their findings on its Web site.

The researchers carried out the study by taking advantage of The Sacramento Bee's March 2008 decision to publish a searchable database containing individual pay information for California state employees, including workers in the University of California and California State University systems. The researchers sent a substantial share of employees of the University of California at Los Angeles, the University of California at San Diego, and the University of California at Santa Cruz e-mails letting them know about the site with pay information, and subsequently sent surveys gauging job satisfaction to both employees who knew about the site and employees who had claimed in an earlier survey not to have any knowledge of it. Their analysis focused on the survey responses of about 6,400 university workers, 15 percent of whom were faculty members and 85 percent of whom were staff members.

The paper summarizing the study says its findings "indicate that employers have a strong incentive to impose pay secrecy rules." It also notes, however, that forcing employers to disclose the salaries of all of their workers might have a long-term impact on the composition of their work force and how their wages are distributed.

Comments

1. 22280998 - September 27, 2010 at 04:01 pm

The job satisfaction may well be due to real pay inequities. Those receiving higher pay may see themselves as appropriately rewarded for their contributions while those reciving lower salaries (who see themselves as making equivalent contributions as those paid more) may feel taken advantage.

2. jstoner - September 27, 2010 at 04:31 pm

I believe the people at the lower end of the pay scale often are the ones that either get more work assigned or feel like more work is assigned to them, especially under hiring freeze budget cycles. This added work and no added pay can signficantly affect job satisfaction when they might already feel underpaid.

3. gmwalters - September 27, 2010 at 04:34 pm

Inequity in compensation will generally create dissatisfaction. Salaries may not be equal because of legitimate reasons (years of experience, particular expertise, etc.). It really isn't a matter of job satisfaction, it is a matter of equal pay for equal work.

4. blue_state_academic - September 27, 2010 at 04:35 pm

Great database -- allows you to see that Card made $290,038.89 in 2009.

5. waterstm - September 27, 2010 at 04:45 pm

What is the surprise here? Which employee would be happy to learn that other employees doing the same job get more pay? Employers might benefit from secrecy about pay inequity; they might not if experienced, excellent employees move to jobs that offer more money and satisfaction.

6. nacrandell - September 27, 2010 at 04:57 pm

"The researchers carried out the study by taking advantage of The Sacramento Bee's March 2008 decision to publish a searchable database containing individual pay information for California state employees, including workers in the University of California and California State University systems."

Wow - what poor research. This material can be found for any state as it concerns state expenditures, yest they depend on the paper's database? Also, the entire research is just rehash of accepted reaction and previous articles.

7. 11151195 - September 27, 2010 at 05:45 pm

In the state of New YOrk there is a web site (not a state website) which makes it possible to track salaries of public employees. In the state university of new york, the faculty union on a number of campuses routinely publish all salaries -- that is, of unionized employees and management employees. I've heard of communities in other states where, as in Sacramento, local papers routinely publish public salaries. My impression is that colleagues understand that a person on the payroll for twenty years will earn more than someone with five years. Yes, there are many academic intitutions where absolute secrecy is imposed. As we learned from the Lilly Ledbetter case, secrecy has more downsides than transparency. We also have learned (as has the top leadership of SUNY in the last few days) what happens when there is no check/balance accountability for salary and perk allocations.

8. woodland - September 27, 2010 at 06:20 pm

Regardless of the affect it my have upon employees, the salary of every employee in the California State University (CSU) System is a matter of public record. All one need do is request the salary list for their campus, which is often held in the library. The lists are updated annually. There is no secrecy.

9. 12071647 - September 27, 2010 at 07:43 pm

11151195: "...My impression is that colleagues understand that a person on the payroll for twenty years will earn more than someone with five years...."

Incorrect assumption here. At my institution, the Provost says, "New faculty are better!", and salary compression (junior faculty paid more) is rampant.

10. struwwelpeter - September 27, 2010 at 09:24 pm

"The closer they were to the bottom, the more unhappy with their jobs they were likely to become, the study found."

No! Who could have predicted that difference?


I can tell you the cause-and-effect relationship that finding out all my department's faculty salaries had on me. I put my union "yes" ballot in the mail last week. I would have voted union in any case, but I actively recruited after finding out the salaries.

11. dank48 - September 28, 2010 at 08:21 am

Really? No kidding? Wow.

It's really too bad Esquire doesn't do the Dubious Achievements of the Year any more. This deserves a place next to the study that determined that people who are in love with each other spend more time looking into each other's eyes than people who aren't.

There was an article lately asking why the public hates professors. The public doesn't hate professors. But studies confirming the obvious don't exactly build respect in the public mind.

Doubtless that's totally explainable by the public's naivete and inability to understand great big words.

12. brebenne - September 28, 2010 at 09:02 am

Just do what they do in the British system--make a civil servant scale. Honestly, the fact that salaries are negotiated to such an extent in the US depresses the average wage while raising the higher salaries. In the British and Australia system there is a pay band across the board for universities. This has a lower ceiling often but usually a higher floor. There is also more equality because everyone has the same pay at the same level. The United States is often radically behind the rest of the world and what passes as a story or a research article has already been solved elsewhere in the world and is the basis of everyday life (but the opposite is often true too!).

13. dougsmith - September 28, 2010 at 10:04 am

And in other news, the earth is round and the ocean's wet.

14. crunchycon - September 28, 2010 at 10:07 am

The Daily Illini, the U of Illinois Urbana-Champaign campus newspaper, printed a section last spring on the salaries of all university employees making over $30,000, organized by department/college/unit/section. The information was also made available online.

15. jthelin - September 28, 2010 at 10:23 am

On closer inspection there often are added pleasantries -- at the University of Kentucky, the vice presidents receive an added 5% of their salary from the university that is paid into each's TIAA CREF retirement fund. This does not show up on the salary calculation.

Perhaps this is a negligible amount. However, when it includes a range of about 20 salaries from $750K to $180K, it can total about $400K per year in recurring expenditures.

16. berkeleyprof - September 28, 2010 at 12:33 pm

I have taught at two public universities. The first one made salaries public; for a long time, Berkeley did not. Frankly, I like seeing where I stand relative to others. I work hard, but there are a few characters in my department who don't and try to game things. I was pleasantly surprised to see that the salaries in my department seemed to reflect our collective values regarding the three major areas of responsibility (research, teaching and service).

17. clasfaculty - September 28, 2010 at 12:34 pm

I hope tneure is not riding on this study. Information poorly presented is worse than no information at all.

18. impossible_exchange - September 28, 2010 at 12:38 pm

"There is some Bliss in Ignorance" the title says.
Is there?
Perhaps for those in administrative positions that is true, like it is true in authoritarian regimes and oligarchical societies like ours.
"Feed the peasants gruel and don't let them know that you get to eat steak."
What kind of person who thinks about higher education says something like, "Bliss in Ignorance" when talking about income inequalities that are basically unfair. Marketing profs and business profs have no inherent merit that makes them worth more than a fine arts prof.
The discrepancy is the result of our society's particular and somewhat wacky notions of value and importance.

19. directora - September 28, 2010 at 03:33 pm

12071647-Thanks for your comment. Here, salary compression is rampant amongst faculty and staff. Recent hires in faculty and staff get the benefit of updated salary information while the rest of us are stuck in the past, with medians established 14 or more years ago.

20. jeffczarnec - September 28, 2010 at 08:12 pm

I have toiled for a fully-accredited four-year college, owned by a major training corporation. A tactic that I have been hurt by is their tactic of bringing in new professors at a higher rate than the veterans. I am the Department Chairman, and in spite of the monumental advances that I have made,my two full-time faculty members (recent hires) make eight-thousand dollars per year more than I.

21. landrumkelly - September 30, 2010 at 09:01 pm

Yeah, keep the masses happy and manageable. . . .

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