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You're not getting paid enough... #justifiedpay

Think about money differently. Be conscious of what you get paid, why it’s being paid, ensure payment to others is fair and support businesses where this happens.


You’re not getting paid enough, or are you? Why is your paycheque what it is? How did that amount get determined? Who decided what your work is worth?


Sustainability is about people, profit and the planet. We often default to thinking about the environment when we hear the term sustainability but it’s also about people. It’s about fairness and equality and social justice. Companies are made up of people, people who come together in a system, make decisions, carry out actions and, who can be influenced. A firm is not some inanimate box. There are those in business who will only look out for themselves and we have created systems that allow this (there is some fascinating research about the level of psychopathy in executives being double that of the general population, but I digress…). We as a society have allowed these systems to perpetuate and we as a society can change these systems to make them more fair.


People always ask me why I love numbers so much but it’s not the numbers I love, it’s the stories the numbers tell. With all the talk lately about the gender pay gap and controversies about executive compensation I’m fascinated by how pay gets determined. This tells us a lot about the society we live in and what we value. What does it say when the pay we provide someone who works forty hours a week isn’t enough for food, rent and other necessities? What does it say when we pay someone to prioritize a company’s profit over its’ people and the world we live in?


What justifies pay levels?


There are a variety of things that determine what you get paid including what the job is as well as who you are. We know for example that pay gaps exist even amongst two people where the job is the same and the person is equally qualified. What does this tell us? Research tells us we ‘value’ men and women differently as we do minorities or anyone who is different from the majority. What we pay people tells us a lot about who we are.


There are different arguments put forth justifying levels of pay. When pay is high, it is often argued that the individual provides a rare skill set, perhaps a unique athletic talent; it could be that the person went to school for many years acquiring knowledge that is difficult to find or works more hours than most. It is also argued that an individual may have an ability to create economic value or profit for a company that is far greater than the amount paid to them and this justifies the pay level. Or perhaps the work is particularly difficult or undesirable and therefore requires higher levels of pay. Some argue that if two parties have agreed to a pay level it is of no-one else’s concern. But what if it is not just between those two parties? What if it is indicative of larger issues in society?


Executives of large companies are among the highest paid in our society. Many questions continue to be asked about why this is the case. Typically, the justification from the firm for executive pay goes something like this: we pay for performance. But, what is performance? You might think this is straight-forward but the discussions around this are actually quite lengthy. If a company loses money should the executives get a bonus? You might say no but they frequently do receive bonuses even when they lose money. There is often discussion of needing to retain the executives or the extenuating circumstances that support providing a bonus in these cases. What if the company made money but paid its workers less than they need to live on or did so by polluting the environment? Does this qualify as ‘performance’? And where is the limit? Much has been written about the rise in executive compensation over the last 50 years. A CEO in the 70’s received about 30 times the average worker’s salary; today, it has risen to about 300 times. The share of income going to the top earners has risen dramatically in this time. What justifies this shift? How much is too much? Where is the limit?


What can you do?


If you think of the amount of money in society as being a fixed amount, how it gets distributed is important. Compensation decisions affect our quality of life. The amount of money we make affects how much money we have to live on, to spend on discretionary items, to give to others, to raise our children and provide them with opportunities. Effort and skill should be rewarded, and this does lead to unequal distribution but, in fact, people prefer to live in societies that are unequal but not in societies that are unfair. As a society we need to clearly think about the upper and lower limits we are willing to accept and understand what this says about what we value.

If you are in a position where you determine what others make, consider what factors affect how much you are paying your employees. If you are an employee, consider the same. Research shows us that by thinking about these issues we can reduce our unconscious bias. You can also be a conscious shopper. Support businesses that provide living wages. Costco is one example of a place that provides good wages and good prices.


What we earn determines so much of our life. It affects our health, our happiness, the choices we make and the path our children follow. As an individual you have the right to understand what justifies your pay and the responsibility to justify pay you provide to others. Pay needn’t be a taboo topic. If we commit to asking questions and shining a brighter light on the subject, understanding the legitimate factors that support what we get paid and identifying the factors that are not legitimate, perhaps we can change the way people are paid. If we pay attention to these issues, we can and will create a more fair world. #justifiedpay


This is my last blog post for the Public Scholars program. If you’ve enjoyed reading my blog posts I will continue them at www.leannekeddie.ca

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