How Non-Financial Rewards Widen Workplace Inequality

When we think of inequalities in the workplace, we automatically, and understandably, think of the pay and remuneration we receive for the work we do. While this is natural, recent research from the London School of Economics reminds us that it doesn't capture the entire situation as far as inequality is concerned.

For instance, it's increasingly clear that we are valuing not just the size of our pay packet at work, but also various non-financial aspects, such as camaraderie with our colleagues, personal development opportunities, and meaningful work. Indeed, during the Covid pandemic, one of the most notable "perks" of a job is its ability to performed remotely, thus keeping people out of harm's way.

Generally speaking, there is a correlation between the monetary rewards offered by a job and the non-monetary benefits it provides, with higher paid jobs tending to offer better non-monetary rewards than their lower-paid alternatives. This, the researchers posit, means that inequality is even greater than the official figures suggest.

An unequal world

This matters, as while there have been active efforts around the world to provide a more guaranteed income with things like minimum wage schemes and even the furlough programs introduced during Covid, there has been less attention given to non-monetary aspects of our work. It's increasingly understood that things like access to professional development and meaningful work play a huge role in our wellbeing.

As such, the authors argue that we need to look at these non-monetary factors to truly understand workplace equality and not fall into the trap of stopping at income because it's the easiest thing to measure. The matter is compounded by the fact that non-monetary elements are often not contained in official data, plus the fact that each of us probably values these non-monetary factors differently.

The research proposes a couple of possible solutions to these problems. They begin by monitoring the subjective wellbeing of workers across the U.K. to understand how life satisfaction differs across jobs. By holding the income of people constant this enables the researchers to understand the value workers assign to the non-monetary aspects of their job.

Differing rewards

This analysis of the full spectrum of rewards offered by various jobs highlighted the divergence between professions. Interestingly, however, while there are differences in the non-monetary rewards offered between professions, they are consistently higher in higher-paid jobs.  

Indeed, the researchers argue that labor-market inequality is one-third higher when taking into account the non-monetary rewards offered by each job than when looking purely at wages alone.

What's more, these differences in non-monetary benefits endure even when looking at people with broadly similar education levels. Perhaps the most worrying finding, however, is when we look at people with low incomes, as they tend to have very poor non-monetary benefits on top of low pay. That these jobs are disproportionately filled by women and ethnic minorities compounds matters.

The data showed that some jobs, such as construction supervisor, skilled trade supervisors, sports and fitness professionals, and R&D managers, enjoyed higher "full earnings" when their non-monetary benefits were taken into account. By contrast, roles such as sales supervisors, caring personal services, and customer service roles, tended to have much lower full earnings.

Education is key

Perhaps unsurprisingly, education was found to be a crucial determinant in the non-monetary rewards people have access to during their career, with the higher our education, the more likely we are to be bestowed with good non-monetary benefits.

This was especially evident in managerial and professional occupations, but there were professions that offer lower-educated individuals the best of both worlds. For instance, in lower-ranked administrative occupations, lower educated people often enjoyed better amenities than degree-educated peers.

While degrees generally pay off in terms of the full rewards on offer, the larger range of jobs available to degree-educated people also means that there is a wider range of benefits available.

Harming social mobility

This matters, as research from Boston College highlights how worsening economic inequality harms our prospects of social mobility. The study reveals that rising economic inequality makes upward mobility feel practically impossible for disadvantaged youths, which in turn results in lower motivation and less productive behaviors.

It’s fairly well known that behaviors such as dropping out of school and early pregnancy are more common among disadvantaged youngsters in areas with high levels of inequality. It’s also fairly well known that inequality affects us psychologically, and can weaken our belief in socioeconomic opportunity, which in turn reduces the chances of us behaving in the right way.

The Boston research aimed to bring together the social sciences to gain a more holistic overview of how inequality affects our choices and behaviors, and subsequently the levels of social mobility.

“Economists, psychologists, and other social scientists have worked to understand how economic inequality influences the life outcomes of disadvantaged youth, but research in these disciplines has proceeded largely in parallel,” the authors say. “Integrating these separate lines of research, we find strong evidence that one way that economic inequality can contribute to negative outcomes for disadvantaged youth is by weakening the motivating belief that achieving socioeconomic success is possible for them.”

Changing the situation

So what can be done to change things? Research from New York University suggests that we're generally happy with inequality when we think the economy is fair.

“Research has shown that people generally have an aversion to unequal distributions of resources, an example of which may be a person we see sleeping on a grate or lacking access to basic necessities, healthcare, and education,” the researchers explain. “Yet many people either pay little attention to or are otherwise unbothered by rising economic disparities–responses that some may have difficulty understanding.”

If we do want to change things, however, then messaging will be key. New research from the University of California, Irvine explores how certain forms of messaging can result in more people supporting actions to mitigate inequality.

The study suggests that when messaging focuses on the disadvantages people face when they’re from lower-socioeconomic classes, people are more likely to engage with the issue. This is compared to messaging that focuses more on the advantages the upper-classes receive.

Whether on social media, via surveys, or in face-to-face conversations, the researchers found that people were much more receptive to messaging that focused more on reducing poverty and on the disadvantages faced by the lower-classes than they were on reducing the wealth gap between rich and poor or the advantages experienced by the upper-classes.

“These views, in part, are driven by people’s views that disadvantages faced by the lower-class are more unjust than upper-class advantages,” the researchers say.

While messaging appears to be key, it seems we might also want policy makers to focus on non-monetary factors as well as the more traditional financial ones.