Financial compensation is probably a big factor for most of us when choosing where we work.
But especially in the modern workplace, on-the-job amenities and benefits are often a close second, if not an equal, consideration. And a new working paper published by the National Bureau of Economic Research shows that American workers are willing to take a pay cut if it means access to on-the-job perks like a flexible schedule or the ability to telecommute, paid vacation and even how much autonomy we have to prioritize tasks every day.
The paper analyzes data from the RAND Corporation’s 2015 American Working Conditions Survey to determine how much compensation workers are willing to give up for non-monetary benefits. To do this, they looked at “willingness to pay,” a way to measure the wage increase equivalent to moving from a job where you have no perks to one where you have access to the best mix of non-monetary benefits. The results showed that for the average American worker, making that transition would be the equivalent of a 56 percent wage increase, which they say suggests “that non-wage characteristics play a central role in job choice and compensation.”
Going from a higher-wage job with no paid time off to a lower-wage job with 20 days paid time off would equal a 23 percent 40 percent of respondents said that they would prefer a lower-wage job where your schedule is flexible and you can choose to telecommute over one where you’d make more but didn’t have those perks. They also examined how this data breaks out further when accounting for factors like age, education and race.
How much does/did pay versus non-monetary benefits factor in to your decision to work where you do? And what can we learn from this data about how much money employers are willing to spend and do spend on making benefits like flexible schedules, option to telecommute or how much team-based work you have to do?
Larry Mantle talks to one of the co-authors of the paper about what her team found in its analysis and what it tells us about how much perks matter to American workers and employers compared to money. Join the conversation at 866-893-5722.
Kathleen Mullen¸ senior economist at the RAND Corporation and co-author of the working paper “The Value of Working Conditions in the United States and Implications for the Structure of Wages”; she is also associate director of RAND’s Economics, Sociology and Statistics Department as well as the editor-in-chief of The RAND Journal of Economics