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March 30, 2006

Job Satisfaction vs. Cold Hard Cash

How much of a pay cut would you be willing to accept to take a more satisfying job?

Via Kevin Drum, I see that UBC professors John Helliwell and Haifang Huang have tried to put a number on how much different kinds of job satisfaction are worth in cold, hard cash.  The results (cribbed from this summary at MSNBC):

  • Increased trust in your employer is worth a 36 percent pay raise.
  • A greater variety of projects is worth a 21 percent pay hike.
  • Having a position that requires skill worth 19 percent more pay.
  • Having enough time to finish your work is worth 11 percent more pay.

Based on this, then, you'd be happier overall taking a 20 percent pay cut to work at a place where you trust your employers more; but you're better off in sticking with a somewhat harried job than taking that same pay cut to work at a more measured pace.  Of course, this somewhat contradicts this earlier post on a study that found, among other things, that working on a job where there's pressure to work quickly is just about the least satisfying thing you can do with your time.

It's also worth noting that increased pay doesn't do all that much for your happiness: a pay raise of $100,000 only begins to approach the wellbeing people typically derive from a stable marriage. This suggests that a slightly slower pace of work probably only does a little bit for your wellbeing.  Still, every little bit helps.

Posted by ClarkWD | Permalink

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Comments

Since you talk about money so much in this entry, I was wondering if someone could tell me how much money Idaho makes selling livestock? I posted something like this post in another blog entry, but I ddidn't think that that one was the right one, so I was just wondeirng if someone could tell me if they knew it. Thanks.

Posted by: Cassie | Mar 30, 2006 7:29:44 PM

Now, is anybody willing to give up 87% of their income to get all four?

Posted by: Kevin Connor | Mar 31, 2006 1:42:36 PM

Kevin-
Good point. Seems like you'd be more likely to just stop working than to take a job that's so much less lucrative.

But weirdly enough, it's only a 64 percent cut -- the percentages are multiplied, not added. That's a huge pay cut -- but I actually know 2 people who've taken that kind of pay cut (well, >50% at least) to do what they loved. Then again, they were making enough to begin with, and living modestly enough, that they could still make ends meet despite the pay cut.

Posted by: Clark Williams-Derry | Mar 31, 2006 8:07:03 PM

I did, I moved out of the IT telecommunications industry and into teaching and consulting in renwable energy and sustainability areas and took a 66% cut in income. But it's still enough to put bread on the table.

Bottom line? As I tell anybody (and everybody), "I'm not making much money but I'm having heaps of fun".

You never hear anybody on their deathbed say, "I WISH I had worked harder in my lfe".

Cheers
MOC

Posted by: Mike | Apr 1, 2006 5:45:10 AM

I figured there'd have to be some overlap if you started combining benefits, but if the numbers aren't cumulative that makes me wonder how seriously to take any one specific number. Could you be so good as to explain how the percentages combine to give 64%? It doesn't seem to be a direct multiplication unless I'm getting more confused than ordinarily by the relation between pay hikes and pay cuts.

I wonder if the seeming contradiction with respect to not having to perform work overly quickly is due to a skepticism regarding the availability of such employment relative to the availability of employment where your employer can be trusted.

Posted by: Kevin Connor | Apr 4, 2006 2:14:08 PM

Kevin -
Sure, the way I figure it, it's (1-.36)*(1-.21)*(1-.19)*(1-.11). So: first you take a 36 percent pay cut; then a 21 percent cut from that lower level; then a 19 percent cut from the even lower level; then an 11 percent cut from the level that's lower still. (Really, you could take the pay cuts in any order.)

Does that make sense?

And that's a good question about the trust vs. time issue -- I have no idea, but it sounds possible.

Posted by: Clark Williams-Derry | Apr 4, 2006 2:49:32 PM

Great, thanks, your explanation makes perfect sense, but I think you'll agree that your equation isn't equivalent to your explanation. The actual equation is something rather complicated to write like (X- .36X) - .21(X-.36X)- etc. where X= original pay level.

Posted by: Kevin Connor | Apr 4, 2006 5:09:03 PM