Money Doesn’t Buy Happiness At Work
Via Forbes : Since I started writing about careers five years ago, numerous surveys on employee satisfaction have crossed my desk. When asked to rank the aspect of their jobs that they deem most important, employees routinely put compensation at the top of the list.
Example: a survey of 600 employees taken by the Society of Human Resource Management in 2013 that showed that 60% of workers rated pay as the aspect of their jobs that made them feel most satisfied. (Job security and opportunities to use their skills and ability tied for second place.) Two years before the SHRM survey, my former colleague Jacquelyn Smith wrote about an analysis of 40,000 job reviews by employees at 13,000 companies between 2010 and 2011. The data showed people’s job satisfaction ratings climbing with their salaries. And in a 2014 study commissioned by consulting firm SAP that surveyed 5,400 employees and executives in 27 countries, two thirds of respondents ranked competitive compensation as the most important attribute of a job, a full 20% higher than the next-most-valued benefit.
Beyond the office, in 2013 I wrote about a sweeping study by two university of Michigan professors, Betsey Stevenson and Justin Wolfers, who used data on 155 countries from Gallup, the Pew Attitudes Survey, the World Bank and other sources to determine that the wealthier people were, the more satisfied they were with their lives. They also found that there was not a point of wealth accumulation beyond which happiness leveled off. One caveat I noted: Stevenson and Wolfers relied on big-picture survey questions about how satisfied people were with their lives overall. Another widely covered 2010 study, by Nobel prize-winning economist Danield Kahneman together with economist Angus Deaton, seemed to conflict with the Stevenson/Wolfers finding because it said that happiness leveled off at incomes of $75,000 ($82,000 in today’s dollars). But Kahneman and Deaton focused on everyday experiences, asking about people’s positive and negative emotional states on the day before they answered the polling questions.
In sum, I’ve assumed that people prioritized making more money and that higher compensation meant more to them than other aspects of their jobs. Salary seemed to be a key to job satisfaction.
But a new piece of data crossed my desk this week that calls my assumptions into question. It’s from eight-year-old jobs website Glassdoor, which I find has an ever-more-impressive trove of data. Glassdoor offers salary information and company reviews but to get access to the full range of its listings, users have to file their own reports about their salaries, jobs and bosses. For its latest report on the link between salary and employee satisfaction, it used a sample of 221,000 Glassdoor users who contributed both a salary report and an employer review for the same company since 2014. One important caveat that I think makes its findings more convincing: It didn’t include data about earners reporting salaries of more than $200,000.
At first blush its analysis seemed to suggest that higher earners were more satisfied than people who made low salaries. On company reviews that let respondents rate both their overall job satisfaction and how much they approved of their compensation and benefits, 51% of respondents making more than $120,000 a year gave either four- or five-star reviews of their experience on the job as opposed to 40% of users making less than $30,000 a year. “In other words, it seems higher salaries mean higher satisfaction,” says Glassdoor’s report. But then Glassdoor senior data scientist Mario Nunez made a more fine-grained analysis, converting the company satisfaction rating to a scale of zero to 100, with zero being completely dissatisfied (a one-star rating) and 100 being completely satisfied (a five-star rating). When he did that, he found a 10% increase in pay was associated with just a one point increase in overall company satisfaction. So for an employee making $40,000 a year who got a $4,000 raise, his satisfaction would rise from 77% to just 78%. Nunez also found “a diminishing return to happiness for every $1,000 in earnings.”
Maybe none of this should surprise me. Glassdoor examined other job attributes it surveyed and found that employees valued them in the following order: “culture and values” at No. 1, “career opportunities,” at No. 2, “senior leadership” at No. 3, “work-life balance” at No. 4, and then compensation and benefits finally at No. 5, just above “business outlook.” Nunez recognizes that culture and values are a kind of catch-all category that includes important things like morale, employee recognition and transparency with an organization.
What does all this data mean when taken together? Here’s what I think: Everyone wants to make a decent living and not to have to worry about paying the mortgage or the rent, school fees, car upkeep and more basically for food and clothes, while saving for retirement and possibly supporting aging parents. If you’re working hard and yet your salary can’t meet those pressing needs, you are bound to feel stressed if not terribly dissatisfied. But once you reach an equilibrium where you can cover your expenses, put away some savings and pay for nice things like generous gifts, nice furniture and vacations, you can spare energy to think about other important parts of your job, like whether you’re growing and learning, whether you’re finding satisfaction through challenging projects, the relationships you have with superiors and colleagues, how senior leadership is leading your company and what sort of career advancement you can expect at your company. Flexibility and work life balance are important for almost everyone.
So I’m skeptical about the notion that people making less than $30,000 a year wouldn’t prioritize making more money. Federal guidelines peg the poverty level at $24,250 for a family of four and if you’re the single earner in your household, a $30,000 annual salary is going to make you want to prioritize making more money, especially if you live in a high-cost city like New York or San Francisco.
I’m also suspicious of the Stevenson/Wolfers finding about greater wealth bringing ever-greater happiness. Two of the richest people in the world, Bill Gates and Warren Buffett, have given away tens of billions of dollars. I think there’s no question that stripping that money from their own portfolios and donating it to the fight against AIDS, polio and malaria, has made them happier indeed.
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