Money feels pretty tight right now for many Americans. A CareerBuilder survey from just a few months ago found that 78 percent of U.S. workers live paycheck to paycheck. Even one in 10 workers who earn more than $100,000 find themselves in this stressful situation.
Given this state of affairs, it’s easy to see why many think that a raise would make them happier, both inside and outside of the office. However, earning more more money might not make you more satisfied with your job in the long-term.
Wage Increases Raise Job Satisfaction, But Only Temporarily
New research from the University of Basel, published in the Journal of Economic Behavior & Organization, explores how wage increases affect job satisfaction.
It turns out that the short-term impact of a raise differs significantly from the long-term benefits. Anticipating a raise does increase job satisfaction, according to the findings. But, after four years, subjects adapted fully to the new wage level, and job satisfaction levels fell back to about where they were before the increase.
In the study, social comparisons also played a role in how wage increases impacted job satisfaction. If an individual felt that their earnings rose by more than their peers’, satisfaction increased further than when this was not a factor.
Smaller Increases And Promotions Work Better
According to the study, raises accompanied by promotions motivated employees more than increases that weren’t tied to a job change. So, employers ought to implement these kinds of changes whenever possible in order to help motivate employees.
The researchers also recommended smaller, regular increases instead of large raises every few years.
“The researchers conclude that wage increases can be a tool to motivate employees, yet only under carefully designed conditions. For instance, when they are implemented regularly and are accompanied by promotions,” reported Science Daily. “Diriwaechter and Shvartsman’s results thus confirm the latest research findings from experimental economics, which indicate that wage increases in small, but regular increments — rather than less frequent but higher increases that add up to an equivalent amount — are the most effective way to motivate employees in the long run.”
There’s More To Job Satisfaction Than Money
This research could help employers to better understand how compensation relates to job satisfaction. However, if they stop there, they’ll be missing a lot. People equate job satisfaction with a lot more than just money these days.
Millennials, who it’s estimated will account for 75 percent of the workforce by 2025, are less motivated by money than they are by making the world a better place. More than 50 percent say they would take a pay cut in order to do work that was aligned with their values. And, 90 percent said they want to use their skills to do good in the world.More than 50 percent of millennials say they would take a pay cut in order to do work that was aligned with their values. Click To Tweet
Another important factor these days is time. In the grand scheme of things, workers of every age understand that more time is sometimes better than more money. Many employees might prefer to work for a company that fosters decent work-life balance over a company that offers higher salaries.
Bottom line: we all need to get paid, but the positive effects of a pay raise don’t last forever. Other factors — like flexibility, inspiration and connection to the meaning of the work itself — matter a lot, too.
Tell Us What You Think
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