A New Religion

by Matthew Stollak on Wednesday, February 1, 2012

Judge, T.A., Piccolo, R.F., Podsakoff, N.P., Shaw, J.C., and Rich, B.L.  (2010).  "The Relationship Between Pay and Job Satisfaction: A Meta-Analysis of the Literature." Journal of Vocational Behavior, 77(2), 157-167.

Wealth continues to fascinate us.  From the Occupy Wall Street protests to offshore bank accounts, income inequality is at the forefront of most newscasts these days. Mime truly is money.  But, does money truly buy more happiness on the job in Corporate America?

In "The Relationship Between Pay and Job Satisfaction," Judge, et al, explore whether income dispersion pays off in terms of happiness.  "How does the pay we receive from our work contribute to our feelings about our jobs and lives?" (Judge, et al, 2010, p. 157). They study three important questions:
  1. At the individual level, is pay level related to: (a) pay satisfaction or (b) overall job satisfaction?
  2. At the organizational/sample level, are average levels of pay level related to (a) pay satisfaction or (b) overall job satsifaction?
  3. Do the following factors moderate the relationship between pay level and job satisfaction or pay level and pay satisfaction: (a) U.S., vs. international samples; (b) publication source (published vs. unpublished, and quality of publication outlet); (c) measure of job or pay satisfaction (d) common v. independent vs. independent sources of data; and (e) measure of pay?
To investigate these questions, Judge, et al, conducted a meta-analysis (a combined impact of many existing studies to produce a more statistically powerful analysis) of 86 studies to estimate the correlations between satisfaction and pay level.


To question 1, Judge and his colleagues found a statistically significant relationship between pay level and both types of satisfaction.  However, with question 3, there was no significant difference between U.S. employees and their international counterparts.  Similarly, no significant difference was found for publication source, measures used, sources of data, or measure of pay.

Question 2 provided the most interesting result.  Here, individuals with high income jobs were only slightly more satisfied than those in low income jobs, and, in some cases, those with lower paying jobs were more satisfied.  To wit, "For example, in 2009 dollars, a sample of lawyers earning an average of $148,000 per year were less job satisfied than a sample of child care workers earning $23,5000 per year." 


1.  For job seekers, other job attributes besides pay should be taken into account, such as intrinsic job characteristics (such as skill variety or task identity).

2.  While pay can be motivating, it may not be as satisfying as once thought.   Being a pay leader may not lead to a more satisfied rank-and-file

3.  Pay increases may only have a temporary effect.  Judge and his colleagues compare the thrill of a pay raise to being a newlywed; you get an initial boost once married, but it soon returns to pre-marital levels.

4.  High pay may only work in areas where there is significant pay dispersion within the organization.  If everyone else's pay is high around me, that increase loses some of its effect as well.

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