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Salary Tied To Self-Worth

A study says salary is best kept a secret.

By Rich_Maloof Oct 4, 2012 4:43PM

Do you keep your salary a secret? There’s no firm data on how many people do, but we’ll venture a guess that most consider income a personal matter. It’s irksome even when credit-card applications or marketing questionnaires ask for a salary range. We may be naturally curious to know what a friend or colleague is banking, but a polite adult never asks.

A study out of Madrid has concluded that knowing how much co-workers earn can lead to unhappiness.

Photo: Rosemary Roberts/Alamy“One of the keys to happiness at work is earning a lot of money,” the study summary reads, “but what is equally important, if not more important, is that our earnings not be inferior to those of our peers, that is, of the colleagues we compare ourselves to.”

Like siblings vying for Mom and Dad’s attention, the employees’ gauge of how well a “parent” company regards them is all caught up in pay. It’s how a business shows love, of a sort, and without it we feel undervalued. Even when the daily grind is not enjoyed or tied to personal passions, a conscientious worker still wants to be appreciated, regarded and rewarded. According to the study by Professor Eduardo Pérez Asenjo of Universidad Carlos III in Madrid, comparing one’s income to the pay received by colleagues is an almost certain recipe for unhappiness (read the complete study here). Ed Lawler of USC’s Marshall School of Business, who has also researched salary secrecy, has actually expressed an opposing view favoring salary transparency.

Lawler once explained to U.S. News & World Report that the lowest-paid employees at a company will rarely speak up about how much they make while big-number braggarts boast about their increases — leading to lopsided perceptions. “It turns out that people tend to overestimate the pay of others in a condition of secrecy,” Lawler said. If Professor Pérez Asenjo is correct that our happiness is tied to a pay comparison, are you better off guessing at numbers or knowing the truth? 

The professor also found in his study that people with inferior earnings will work more hours in an effort to catch up to their peers. So not only are you feeling worse about yourself, you’re dedicating more of your time to the source of your unhappiness. Seen another way, though, isn’t this the nature of capitalist competition and a healthy work ethic? Hard work is expected to be rewarded. The employer gains the benefit of productivity, while the employee sees a salary increase and the positive feelings that come along with it. As long as an employer recognizes and rewards hard work — a big “what if” — it seems like there's a strong upside to having salary hogtied to self-worth.

Bing: How much does the average American earn?

Photo: Rosemary Roberts/Alamy

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