What we earn, what we should earn

by Ingrid Robeyns on December 27, 2006

Can you ask your siblings and friends how much they earn? Can you ask your co-workers? I guess in many or most places in the world, this is a taboo. This is regrettable, since there are many unjustified earnings inequalities, often related to factors such as gender, race and nepotism. Unjust earnings inequalities can only fade away if individuals demand equal wages for equal work, but therefore they first need to know how much those who are doing this ‘equal work’ are earning (and in many countries much more is needed, such as a shift in power between labour and capital, to put it in these grand terms).

In 17 countries, there exists an internet tool, called the wage indicator, that can tell us how much people in a certain profession (with the same age, seniority, etc. etc.) earn, which may be useful information if you need to negotiate your wage, or if you think you or your colleague should be earning more. For labour scholars, the information gathered by the tool can be used to investigate pay inequalities, and many other trends and facts related to earnings and the workforce. The Dutch version was launched in 2001, and at present the wage indicator is available in many countries, such as South Africa, India, Finland, the UK and the USA.

Clearly the wage indicator has its limitations too. One limitation is inherent for almost all surveys: sometimes you feel that your experience does not fit the questions, and therefore that you can’t answer the question properly. For example, when I had to give the number of years I had been employed, I didn’t know whether I should count my years working on my PhD or not (in the Netherlands and Belgium doctoral students are – euh – not students but employees, whereas in England, where I got my PhD degree, they are students.) Another problem is that there needs to be a minimal number of respondents who have responded to the questionnaire before anything statistically representative can be said about the average earnings of people with your profile. Hence even if you have no personal interest in figuring out what the typical person with your profile earns, you can do labour scholars a favour by filling out this survey. And by reporting any oddities you come across, or your views about these tools, in the comments section. I don’t personally know the scholars who run them, but I’m sure they’ll find us.

{ 15 comments }

1

Matt 12.27.06 at 10:29 am

Well, it was giving me what seem like massively low numbers for lawyers in New York State. I understand, of course, that many lawyers are far from rich, especially by lawyer standards, but I find it hard to believe that the 90% for them is really 44K euro or whatever it was telling me, since the starting salary at public interest places (ie, some of the lowest paying jobs) is usually around 30+. Maybe it just doesn’t have enough info. As a side note, in Russia it’s quite common to ask people what their salary is, but it’s sometimes considered improper to ask people what they do since often enough what their job is could not, in normal ways, provide the level of money that they have.

2

Matt 12.27.06 at 10:31 am

Well, strike my comment about the lawyers in NY- apparently some part of it hadn’t reset properly. It’s still a weird number, and they don’t give the 90% level, but it’s not as off as I thought. (If you check it out make sure the form totally re-sets!)

3

abb1 12.27.06 at 11:04 am

A friend from Moscow visited recently and I asked her how much her husband makes. She said that he gets $2,000 (or something) each month ‘officially’, but “of course I don’t know how much more he gets every month in the secret envelope”. At that point I decided to change the subject.

4

Tom T. 12.27.06 at 4:15 pm

I’m a federal employee. I’m paid according to the publicly-available GS schedule.

5

Peter 12.27.06 at 4:53 pm

Current place, folks don’t like to talk about numbers. Last place I worked, talking about salary was specified in the “employee agreement” as a fire-able offense. I’ve worked at several other places where discussing salary would get both parties fired. I am a software developer in the US.

6

aaron_m 12.27.06 at 5:55 pm

Is it actually legal in the US to fire someone for discussing their salary even if they sign such a contract?

Can the employer put whatever kind of BS they want in such a contract?

7

otto 12.27.06 at 6:41 pm

Ingrid – may I ask, what do you earn?

8

jet 12.27.06 at 7:31 pm

aaron_m,
Most states have “at-will” contracts. What the employer puts in the contract is just to give the employee a heads up on what will get them fired for sure. But being “at-will” means you can be fired for no reason at all.

9

nobody_you_know 12.27.06 at 8:41 pm

Jan. 11, 2001 (SmartPros) — In NLRB v. Main Street Terrace Care Center, the court found that an employer’s unwritten policy prohibiting employees from discussing their salaries violated federal labor law.

10

ingrid 12.28.06 at 3:28 am

Otto – sure, you may ask, but I’m not going to tell you, since you are a complete stranger to me. My relatives, friends and coworkers would get an honest answer to that question (better: have received an answer to that question).

11

abb1 12.28.06 at 10:13 am

C’mon, we are all relatives.

12

Danny yee 12.29.06 at 7:30 am

I like the idea of the Finnish system, where the amount of tax everyone pays is published openly.

13

SF 12.29.06 at 9:17 am

The idea of equal pay for equal work is quaint from a logical point of view, but when one realizes that he has no idea of how to measure work objectively, he also realizes that the truism is not applicable to the real world at all.

14

Suvi 01.01.07 at 12:03 pm

#12 They also publish annual earned income, investment income, tax paid on each, percentage of tax against income, value of assets. It’s fairly open.

Your tax summary also includes all loan balances, and interest on loans.

They have a somewhat similar system in Sweden, and if you feel a need to do so, you can find the financial details of anyone who earns over 20.000 kr. Just ask.

15

abb1 01.01.07 at 5:16 pm

http://news.bbc.co.uk/2/hi/business/3477285.stm

One of Finland’s richest men has been handed a record 170,000 euros speeding ticket, thanks to the country’s policy of relating the fine to your income.

Jussi Salonoja, the 27-year-old heir to a family-owned sausage empire, was given the £116,000 ticket after being caught driving 80km/h in a 40km/h zone.

Helsinki police came up with the figure after tax office data showed that Mr Salonoja earned close to £7m in 2002.

If his penalty stands it will beat the previous record of almost 80,000 euros. …

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