Workers would take a hefty pay cut for the perfect job conditions

EUGENE, Ore. July 27, 2023 Paid time off and remote work options are worth a lot to American workers, University of Oregon research finds.

People might choose a job with a lower wage if it offers other benefits, such as paid vacation, a flexible schedule or lower physical demands, according to a study published in the July issue of American Economics Review.

“If you look at the worst job on these dimensions compared to the absolute best, you would see that people would be willing to trade off about half of their wage to go from one to the other,” said Kathleen Mullen, the corresponding author and an associate professor and Petrone Chair in Economics in the College of Arts and Sciences.

Mullen and her colleagues analyzed national survey data collected in 2015 by the RAND Corporation, a nonprofit research institute. The survey examined the perceived value of a wide range of working conditions, including the level of physical activity, the pace of the job, the availability of paid time off, and whether one has the flexibility to telecommute or set their own schedule.

The researchers used participants’ current wages and working conditions to create hypothetical job profiles. Participants selected their preferred job choice among pairs of hypothetical jobs with different wages and job attributes.

Based on the responses, the team estimated that the monetary value of 10 days of paid time off is equivalent to a 16.4% wage increase, setting one’s own work schedule is equivalent to an 8.9% wage increase and having a moderately physical job versus a heavily active one is equivalent to 14.5% wage increase.

The willingness to forego wages for better working conditions increases with age, the study found. The jump from the worst job to the best job is valued as much as a pay raise of almost 50% by workers ages 25-34, but nearly a 75% raise by workers 62 and older.

Factoring in the perceived value of working conditions also narrowed the gender wage gap by 24%, the study also found.

“This is because women tend to have jobs with lower physical demands, more flexible schedules and more paid time off, which they value more than men,” Mullen said. That said, those preferences are probably shaped by cultural factors such as childcare expectations, Mullen said.

Mullen speculated that people might value these sorts of nonwage benefits even more highly after the widespread labor market disruptions from the COVID-19 pandemic.

“If we were to do this survey today, you might even see bigger valuations on telecommuting and maybe schedule flexibility as well,” Mullen said.

The other authors of the study are Nicole Maestas of Harvard University, David Powell and Jeffrey Wenger of RAND Corporation, and Till von Wachter of the University of California, Los Angeles.

Funding for this research was provided by the Sloan Foundation (grants G-2013-10-21, G-2016-7226, and G-2017-9694) and the Social Security Administration (grants UM15-03 and UM16-08).

Link to study:

By Henry Houston, College of Arts and Sciences

About the College of Arts and Sciences
The College of Arts and Sciences is the University of Oregon’s largest college and the intellectual hub of the university. The College of Arts and Sciences’ liberal arts programs in the natural sciences, social sciences and humanities support the mission of the entire university and shape its identity as a comprehensive research institution. With more than 750 faculty members, the college offers more than 50 undergraduate majors, 70 minors, 42 master’s programs, and 26 doctoral programs to more than 10,000 undergraduate students and 1,285 master’s and PhD students.

Media Contact:
Molly Blancett
University Communications

Source Contact:
Kathleen Mullen
Associate Professor and Petrone Chair in Economics