How do my earnings compare? Pay referents and just earnings

Abstract

Comparisons are crucial in shaping evaluations of one’s own position. Following this notion, we investigated the role of historical, financial, partner, occupational, and regional pay referents in predicting the just gross hourly earnings in a representative sample of German workers. Looking at this broad range of pay referents, we find that higher reference earnings were generally associated with higher just earnings. In particular, controlling for actual gross hourly earnings, higher occupational, regional, and partners’ hourly earnings were associated with higher just gross hourly earnings. One’s own pay history, in form of average hourly earnings over the past 10 years, did not shape just earnings. Financial needs on the household level, however, mapped on to higher just earnings and this association was particularly pronounced among men. Overall, occupational and financial referents showed the strongest association with just earnings followed by partner earnings. These findings underscore that, while referents closely related to one’s job (e.g., occupational referents) are important, referents that extend beyond the sphere of work (e.g., regional, financial, and partner referents) are also relevant in shaping ideas of the just reward.