The government example is interesting because it is often not the case - for an extremely perverse reason. Government agencies that have functions that they actually need to carry out - the military is a good example to start with - outsource a huge amount of the day to day work to contractors who work for places like Raytheon, Northrup Grumman, etc. A lot of these contractors are very well paid; often much more so than the government employees who supervise them. I have personally witnessed projects where there are something like 3 government employees or military officers in charge who are paid government money, and about a hundred contractors who are usually paid tech money. Sometimes this happens because the contractors bid on a contract and are effectively directly managing it but it even happens when the government is directly managing the project and the contractors are essentially "substitute government employees." My impression is that this happens precisely in an attempt to short-circuit the adverse selection phenomenon you describe. The tradeoff is that the contractors typically don't have fancy job titles and are explicitly barred from positions of actual power (ie anything other than doing work).
It's not a good deal for the taxpayer, obviously. A contractor who is a substitute government employee is paid his actual worth, but also a healthy profit for the contracting company. The taxpayer has to pay much more for the same work an employee would be doing. But the government's employment incentives (seniority promotion especially) guarantee that they wouldn't be able to find someone to do that work who's competent to on a government salary.
My husband is from the UK, and he said that people there are less enamored of posh job titles. I believe the UK also has less income inequality (or at least a better social safety net) than the US. I wonder if a country's firms propensity to hand out important sounding job titles is correlated with income inequality.
I think it has more to do with culture. I hear that southern European, German, and Japanse companies care more about titles than the US while also being more equal and stronger safety nets.
Possible. I don't know Americans who say anything like this, but they certainly must be around me everywhere, with some things just not spoken, at least here in New England. I suspect Australians might be an even stronger example than Brits in terms of inequality, as a sort of enforced leveling is part of their culture. I think your husband is on to something, but it is not simple and linear.
I would be cautious on inequality statements about the US in general, however. We take in a large number of immigrants every year, and also attract those will be highest earners in tech fields, even if they are coming because this is where the cutting-edge work is happening and the money is secondary.
I think the main reason people talk about monetary incentives is the same reason they talk about monetary inequality: it is easy to measure.
In the case of inequality, it is also easier to imagine how it might forcibly be more evenly redistributed. Not so in the case of unequal status, attractiveness, health, etc. But that does mean that distribution discussions get pushed to the pecuniary even though non-pecuniary issues are often more important.
Rob, this is an interesting discussion of organizational behavior. Did the book’s author attempt to normalize for managerial effectiveness in the status vs. pay evaluation? That is, if a manager can convince 20 employees to be 10% more effective, is that manager worth twice the average wage? And there can be a similar effect with tech guys who find ways to reduce scrap or increase productivity per employee or productivity per unit of capital investment.
Also, in many organizations there is no good or even rational way to assess an individual’s productivity.
This is something I've discussed with friends before. Would you rather be someone important with responsibility and status or what if you could somehow get paid more and it's a simple not super important job like a barista at Starbucks. In my group most said they'd take more money and who cares about the status. But could just be my friends and me, and could be more complicating factors.
Yes, my wife is motivated by money and thus out earns many of her peers, but has a lower job title, my brother in law is very motivated by status and worked his whole life in the non profit sector.
I inherited a company 29 years ago which now has over 5000 employees, we dominate Toronto. It’s a security guard company. As such, I am quintessentially rentier class. I always keep that in mind, my money comes from the guards pockets. We don’t produce anything, they just work for me and I get a piece of their pay; this places my success into a morally ambiguous position. Capitalism I suppose.
More to the point - status and pay - my 170 management employees are competitive, grasping and venal; being the boss gives me a perspective that can be truly shocking. The pettiness is astounding, in fact, creating an organizational structure with clearly defined jobs is essential to quelling their negative emotions and jealousy. A vacuum or ambiguity is a recipe for the worst kind of resentment and pettiness. It’s not all bad, there’s much to like - selflessness and achievement - but below the surface bubbles a lot of hatred. Adults are children in the wrong circumstances; I am repeatedly shocked at how this problem is never is far from surfacing, it is a major - major - consideration when running a business.
(I love Temple Grandin.) I think we find that human beings are willing to trade many things for money, and that definitely includes Americans. They want to live in a particular place, they want interesting work, they want security, they want to work with congenial people. My brother used to work in a highly specialised industry, with only four rival firms worldwide. He used to say "Good people, high salary, interesting work...pick two." When his firm dropped to only one of those, he got out because he didn't want to move to any of the other four places.
The government example is interesting because it is often not the case - for an extremely perverse reason. Government agencies that have functions that they actually need to carry out - the military is a good example to start with - outsource a huge amount of the day to day work to contractors who work for places like Raytheon, Northrup Grumman, etc. A lot of these contractors are very well paid; often much more so than the government employees who supervise them. I have personally witnessed projects where there are something like 3 government employees or military officers in charge who are paid government money, and about a hundred contractors who are usually paid tech money. Sometimes this happens because the contractors bid on a contract and are effectively directly managing it but it even happens when the government is directly managing the project and the contractors are essentially "substitute government employees." My impression is that this happens precisely in an attempt to short-circuit the adverse selection phenomenon you describe. The tradeoff is that the contractors typically don't have fancy job titles and are explicitly barred from positions of actual power (ie anything other than doing work).
It's not a good deal for the taxpayer, obviously. A contractor who is a substitute government employee is paid his actual worth, but also a healthy profit for the contracting company. The taxpayer has to pay much more for the same work an employee would be doing. But the government's employment incentives (seniority promotion especially) guarantee that they wouldn't be able to find someone to do that work who's competent to on a government salary.
I live in an area with several defense contractors, and this makes sense.
My husband is from the UK, and he said that people there are less enamored of posh job titles. I believe the UK also has less income inequality (or at least a better social safety net) than the US. I wonder if a country's firms propensity to hand out important sounding job titles is correlated with income inequality.
I think it has more to do with culture. I hear that southern European, German, and Japanse companies care more about titles than the US while also being more equal and stronger safety nets.
Possible. I don't know Americans who say anything like this, but they certainly must be around me everywhere, with some things just not spoken, at least here in New England. I suspect Australians might be an even stronger example than Brits in terms of inequality, as a sort of enforced leveling is part of their culture. I think your husband is on to something, but it is not simple and linear.
I would be cautious on inequality statements about the US in general, however. We take in a large number of immigrants every year, and also attract those will be highest earners in tech fields, even if they are coming because this is where the cutting-edge work is happening and the money is secondary.
I think the main reason people talk about monetary incentives is the same reason they talk about monetary inequality: it is easy to measure.
In the case of inequality, it is also easier to imagine how it might forcibly be more evenly redistributed. Not so in the case of unequal status, attractiveness, health, etc. But that does mean that distribution discussions get pushed to the pecuniary even though non-pecuniary issues are often more important.
First rule of social status club, don't talk about social status club
Rob, this is an interesting discussion of organizational behavior. Did the book’s author attempt to normalize for managerial effectiveness in the status vs. pay evaluation? That is, if a manager can convince 20 employees to be 10% more effective, is that manager worth twice the average wage? And there can be a similar effect with tech guys who find ways to reduce scrap or increase productivity per employee or productivity per unit of capital investment.
Also, in many organizations there is no good or even rational way to assess an individual’s productivity.
Interesting point. I haven't finished the book, but haven't seen any discussion of that yet.
I doubt if it will change the direction of the findings, but it might dampen the magnitude a bit.
I like it in general that you made that distinction. This is so often true in many discussions, but people get into taking sides instead.
This is something I've discussed with friends before. Would you rather be someone important with responsibility and status or what if you could somehow get paid more and it's a simple not super important job like a barista at Starbucks. In my group most said they'd take more money and who cares about the status. But could just be my friends and me, and could be more complicating factors.
Yes, my wife is motivated by money and thus out earns many of her peers, but has a lower job title, my brother in law is very motivated by status and worked his whole life in the non profit sector.
I inherited a company 29 years ago which now has over 5000 employees, we dominate Toronto. It’s a security guard company. As such, I am quintessentially rentier class. I always keep that in mind, my money comes from the guards pockets. We don’t produce anything, they just work for me and I get a piece of their pay; this places my success into a morally ambiguous position. Capitalism I suppose.
More to the point - status and pay - my 170 management employees are competitive, grasping and venal; being the boss gives me a perspective that can be truly shocking. The pettiness is astounding, in fact, creating an organizational structure with clearly defined jobs is essential to quelling their negative emotions and jealousy. A vacuum or ambiguity is a recipe for the worst kind of resentment and pettiness. It’s not all bad, there’s much to like - selflessness and achievement - but below the surface bubbles a lot of hatred. Adults are children in the wrong circumstances; I am repeatedly shocked at how this problem is never is far from surfacing, it is a major - major - consideration when running a business.
(I love Temple Grandin.) I think we find that human beings are willing to trade many things for money, and that definitely includes Americans. They want to live in a particular place, they want interesting work, they want security, they want to work with congenial people. My brother used to work in a highly specialised industry, with only four rival firms worldwide. He used to say "Good people, high salary, interesting work...pick two." When his firm dropped to only one of those, he got out because he didn't want to move to any of the other four places.