Do You Care How Much Your Co-Workers Earn?

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A recent study by two economists found that a $75,000 salary is the threshold of happiness for workers. According to the study, workers reported higher levels of happiness as their incomes grew, until they reached $75,000; then the effect reached a plateau. Economists Angus Deaton and Daniel Kahneman explained that workers do continue to feel increased levels of success in conjunction with higher salaries, but their daily levels of happiness didn’t grow at the same rate.

Bing: Should you tell your coworkers how much you make?

Naturally, the study sparked debate about whether any salary has a universal effect on people. A new college graduate looking for her first journalism job might be thrilled to get a starting salary of $75,000. A surgeon with massive student loans accruing interest would probably view that same salary as unacceptable. A single person with little debt can probably do more with that money than a parent of four children. In other words, when it comes to salary, it’s all relative.

Taking that into consideration, the results of a new study on how knowing another person’s salary affects perception your happiness isn’t terribly surprising. In “Inequality at Work: The Effect of Peer Salaries on Job Satisfaction,” researchers found that knowing how much your colleagues make can affect your job satisfaction.

The researchers found that workers making less than the median income expressed only expressed dissatisfaction when they found out they were on the lower end of the scale. Those earning more than the median didn’t express a particular sense of satisfaction that they were on the higher end of wage earners. In fact, both sets of workers expressed frustration with income disparity. The workers on the lower end of the pay scale were more likely to plan on looking for a new job in the coming year and to hold more negative views of their situation.

Slate columnist Ray Fisman does an excellent job of breaking down the study. In his opening paragraph, he recounts when he negotiated a starting salary for his first job out of graduate school. He was content with his salary and new lifestyle until he found out that other equally educated colleagues were earning more than  he. Suddenly, the pay wasn’t adequate.

A site like CBSalary.com is good for someone negotiating his or her salary, but surely some of us are using it to see how much our neighbors are earning. We’re nosy like that, aren’t we?

And more than anything, Fisman’s anecdote gets to the complexity of salary and the issues raised by the study. Do workers view compensation purely as a value for their work? How important is a co-worker’s salary to us? If we think we’re adequately compensated until we realize we’re making less than our cubicle neighbor, how do our views change? And should it matter? As with the idea that $75,000 makes you happy, is everything related to salary relative?

Bing: How to ask for a raise

36 Comments
  1. Very good article! Yes I believe workers do view comp as purely a value for their work and for some…themselves as a person.

    I work in a role where I always know what those around me make. The best teams I’ve ever supported were ones in which everyone knew what everyone else made. Whether because of the nature of the work or because of how the teams were formed.

    And sure there are those that make more than you “think” they should however as a person who sees from intern to executive salary, it doesn’t bother me when people make more.

    I’ve been the one making considerably less and the one making considerably more. As my salary has grown, I’ve learned more $$$ wayyyy more work. I think the issue for me comes when a colleague who is not performing gets a salary bump because all the performers have and now they are below industry standard.

    Now that is when I cry foul play.

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  8. Who cares what anyone else makes! Work for yourself, be self employed, and then you’ll never need to worry about such petty BS! I’ve been loving self employment, and would never give my soul to this kind of child’s play again!

  9. I don’t think its a good idea to know team member salaries as it tends to cause jealousy in the work place. The last place I worked, a new team member did his research and estimated the salary of his co-worker to be @ a much higher rate and started ranting to me. He even went so far as to tell me that I was stupid for working harder and making less than the other co-worker. It got to the point where the other guy found out and the new jealous co-worker pinned the rant on me instead of himself. I ended up losing my job and those two are happily working together. Go figure…hahaha

  10. Money only pays the rent. If you find your self worth in your paycheck you haven’t found much self worth. If my pay is taking care of the bills I am content. There is actually some Bibical Scripture that deals with this. It talks about workers working in the vineyards. Some worked for more hours than others but all got paid the same. When the workers that worked longer complained the vineyard owner said you agreed to work for that rate so that is what I paid you. They should not be interested in what he agreed to with the others.

    The flip side is most of my biggest raises have come when I switched jobs. Generally annual raises will not keep up with the value of your experience.

  11. I care, why I say this is because I’ve work on a job for 11 years, I started from the bottom working my way up, it was hard work plus I’m a hard worker, when it came down to making more money you have to have experience and also have a license to do the job, how every I gone to school to get my online license to persue becoming a Workers Comp Adjuster by law you have to be license, I knew worker comp Insurance for a long time, ok that was done and I apply for opening position within the company, was interview plus I was promise a bonus once I do my 90 days, well that did’nt happen, I kept asking for bonus & raise never happen, I sat there in that position for 2 years nothing, to make a long story short, there were another position open and this young lady out of the clerical department were put in that position with no experience no license, But guess what who had to train her I did, But guess what she was making more than I was, only been with the company for 2 years, I love my job plus I’m a people person always helping, I couldn’t let this company make a jackass out of me, I ended up taking them to court and winning, It was worth it…less stress…It’s not fair to the other party sitting there busting there butt off and the next lazy person sitting next to you making more than you, sorry to say I don’t think so..I’m not the one to complain, you are not going to treat people any kind of old way, this experience has made me stronger than ever…

    • You should take a writing class. Your grammar is terrible. Perhaps you didn’t get the promotion because you cannot aticulate your thoughts. Good thing you filed a lawsuit and were compensated. Heaven forbid you take accountability for your own inadequacies. The new American Dream, Sue somebody! Get a life!

  12. If $75,000 is the “Threshold for Happiness”, what about the millions of families who’s income is one third ($25,000) and they are struggling to make ends meet? Don’t you think they would be very resentful of someone complaining that they earn less than the guy making $80,000? And do you believe that someone making $80,000,000.00 is that much better of a person than those others. It’s all about the “Haves” and the “Have Nots”, which shows how unfair Capitalism can be.

    • “Capitalism isn’t fair”? What are you in the third grade? Let me guess you want some free healthcare and the you want the upper-class to foot the bill. Get a life.

    • The article didn’t state that you can’t be happy if you make less than $75K. It simply stated that for the average person, this is where you peak in terms of happiness with your salary. And if someone is resentful that someone who makes $75K wants to make more, maybe they should look at themselves to see how they can improve their situation instead of sitting around being resentful. Everyone can’t be wealthy and successful, that’s life and life’s not fair. You just have to do the best you can and be happy with it.

    • “Fair”?????
      YOU ARE THE AUTHORITY OF “FAIR”?????

      There is NO such thing as “fair”.
      It is in with Santa and the Easter Bunny.
      Just an abstract concept that your sadistic parents taught you as a child, and…you never found out…they do not exist…Santa,Easter Bunny,Fair.
      YOU make YOUR destiny. Stop fretting about the other person’s achievements and go get your own pot of gold. Stop trying to legislate your pay and go EARN IT.

      • I agree. Though at time I may feel jealous but thats life. If you don’t like it then find a way to change it. Try you best and keep on pushing forward. You shouldn’t have time to dwell on such petty things if you really are to get ahead in this life.

        • I Think what we all must realize is that we all have different experiences and we feel situations differently. If you made 50k and your incompetent or even equal employee made 15k more, you would feel some kind of way (Why Lie). That’s human nature. Whether you agree or not, “money rules everything.” You can choose to not fall into this mindset, but the less you have, the more important it is (Having Money is Not Everything, But Not Having It is). Being compensated fairly is desired and every man’s dream, but unfortunately not a realistic expectation. As a minority, I have come to expect to be paid less and/or work harder as well as deal with the numerous stereotypes and disadvantages placed on me, but I refuse to let these things to slow me down or discourage me. It sucks, but that’s just the way it is. I would hope in the future, we realize that they’re are some unfair practices that decide pay (personal relationships, age, race, sex, etc.)and that as soon as these practices are modified, the amount needed to be happy (not taking into consideration inflation) will be lower and mean more.

  13. I strongly disapprove of people sharing salary information. This is like sharing information about your sex life. No one needs to know salaries in order to do their jobs except for certain managers and accountants who need to project costs and do budgets, and they should be sworn to secrecy. A salary is between an individual and his/her employer and should be kept confidential. To reveal other people’s salaries is an invasion of privacy and confidentiality.

    • Unless it it a state government, in which case in many states, it is public record. I have seen co-workder post the entire departments salaries for everyone to see.

    • I strongly agree, knowing someone makes more then you do and having to work with them everyday incourages discontent and work place bitterness, especially if you already feel the person is a worthless slacker wheather it is true or not.

      • Jimbo, Chris and DCrawley – there is pending legislation that would make it illegal for employers to fire staff who share salary figures among themselves.

        I’m guessing you all might be white males. Wage discrimination based on anything other than worth (gender, race, etc.) will not end w/o wage transparency in both the public and private sectors. I personally don’t care who know’s what I make; I just want to make sure what I make is fair.

        I suspect that if this excellent legislation ever materializes, there will need to be a long lead time from the date it passes to the date it goes into effect.
        Practically every company will need to scramble to make payout offers to countless employees who have been underpaid for years (in exchange for employee signatures on legal documents, promising not to sue.) Otherwise, our system will collapse, like it almost did about two years ago.

        Our success as a country, when measured in terms of productivity, is as high as it is due countless unpaid overtime workers are forced to complete. Likewise, much of our country’s free enterprise success is based on rampant wage discrimination.

  14. What if the public sector employee is making $150,000 a year or more? You can’t retire, you pay more in taxes to pay for their grand lifestyles, secure employment environments and early retirements. Welcome to the new Pre-revolutionary France!! We have the government class and the lowly servant class.

  15. Who the heck is making these salaries? I wish I was. I went from middle class to lower middle class then poverty with my last two jobs and unemployment. I was never paid what I was worth so I never made anywhere near that. I would be soooooooo thankful to earn that kind of coin I wouldn’t be jealous of anyone sitting around me regardless.

  16. I agree. We should all know what our co-workers make. It would give me a better understanding to the amount of effort I should put in since some colleagues don’t deserve to make more or the same amount if they don’t perform close to my level.

    • Its all or nothing. Everyone should know so they can decide what’s “fair” for themselves or no one should know so people at least think things are “fair”.

    • REALLY!!!! So you are bound in how you work according to others salery. Hmmmm. You wouldnt last 30 days in any Co. I would run. Your work ethic is terrible. Just becouse you may make a buck or two less than your co-worker doesnt mean you produce less or more. Its a self-ethic ideal. I assume you never spent a day doing hard work or even in the military. Military, theres a really underpaid occupation, and their pay is public info. Most of them, approx. 70% of the work force in the military makes less than 75k a year. And you complain about the guy sitting in the cubical next to you who goes home every day after spending most of the day internet browsing on the company dime (the same as you) to their family or whatever, and takes for granted their freedoms. GO, LEAVE, find it better elswhere.

  17. Have been working for national and international corporations the game is the same, unfair… extroverted coworkers much bla bla bla than knowledge making more money than you… working hard for an undeserved low pay salary.
    From my side, I don’t really care how much my colleagues are making and we shouldn’t ask for, but I am curious any way. On the other hand, if making more money is the point to reach happiness, and in that context, don’t forget that 70% of rich people in America are self made working for themselves.

  18. Wow this truly hits a spot close to my heart right now. I work for a grocery store non-union. I am the assistant manager of the meat department and I know 2 people who are my co-workers make the same or more than I do. So why would not this upset me I have more responsibilities and get paid equal and in one situation less. What is my motivation to manage them? And in order to know you are getting paid equal it is essential that you know roughly what your co-workers make. If they make more than they should do more work period!!! In another situation I was asked to temprarily be meat manager for 6 weeks for another store location I was not given any extra, besides mileage .45/mile= $6.75 extra per day, so again money does matter indeed in my opinion it surely does.

  19. Guess everyone I know is unhappy then. Who knew?

    What a stupid, unrealistic, douchey, article.

    I base my happiness on how many stupid articles are on MSN. The more stupid articles the more sad I get. Today I am suicidal! LOL.

  20. I find that all the things I bought I really didn’t take with me into the next decade as far as stuff goes. And, the stuff I have clutters my mind in a sort of idolatry. I would like more friends than money and definately more health and wisdom. But, the idea of going anywhere I want and buying any type of food I want sounds good too. I heard of a wealthy guy, a guy of means, that bought another employee instead of taking the 25,000 in profit taking, reinvestment, or whatever. This is interesting: people that have all their money tied up in people. I hope they can afford to buy a pizza.

  21. In my last job my supervisor made a point of
    showing me where my salary fell in relatioship to
    my position. Knowing that my salary was at the low end
    of the salary range, without any sugestion of how to improve the situation,
    had a negative affect on me. Why would you do such a thing?

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