“Why people earn what they earn…” is a promising sub-title for a book about labor economics. The rest of the subtitle — “and what you can do now to make more” — is absolutely tantalizing. The actual title of the book, however, is simply “Pay”, and the author, Kevin H. Hallock of Cornell University, is one of the nation’s leading authorities on compensation. This is a study of how organizations determine what a person’s labor is worth, how to evaluate both the worker and the job, how both moderate and “superstar” salaries are determined and the many forms of compensation, from cash in an envelope to stock options. It’s not always money. Dr. Hallock analyzes the compensation policies of both profit-making and non-profit organizations. There are also inquiries into whether salaries should be made public. It’s all fleshed out with examples, case histoires and revealing statistics.
So we know that the average worker costs firms $30.11 per hour and of that $20.91 (69.4 percent) is in wages and salaries and $9.21 (30.6 percent !) is in other forms of compensation. This is a striking figure that, I feel, is underappreciated by many workers. These numbers are just averages and many workers don’t enjoy any decent benefits. What are these benefits that make up a cost of $9.21 to employers? A related question that we will get to later is whether employees perceive (some of) them as benefits to themselves as individuals. Of the $9.21 per hour, $2.07 (on average) is for paid leave time. So 6.9 percent ($2.07/$30.11) of the costs to employers for each hour worked can be traced to paid leave. — from “Pay”
There is a chatty feel to much of “Pay”. Dr. Hallock admits that after many years of providing scholarly and technical papers on economics for publications like the Journal of Corporate Finance, he wanted to write something accessible to the general reader and useful to financial and human resources professionals. Kevin H. Hallock is the Donald C. Opatrny ’74 Chair of the Department of Economics and Joseph R. Rich ’80 Professor of Economics and of Human Resource Studies at Cornell University. He is also director of Cornell’s Institute for Compensation Studies. Professor Hallock is also research associate at the National Bureau of Economic Research, a board member of the WorldatWork Society and Distinguished Principal Researcher on Executive Compensation at The Conference Board. He previously chaired Cornell’s financial policy committee.
Personal income can be a very personal subject and Hallock mentions the embarrasment and resentment felt when pay scales become public. At the same time, salaries and other compensation in government work are required to be on the public record. The book concludes with a chapter on how to get a raise. After mentioning the “easy stuff” (“don’t be a jerk”) he goes on to recommend that everyone become aware of their institution’s pay system and, if you can find out, how much others are making. Cultivate good contacts, be flexible and willing to take on tasks beyond your job description.