Hourly Pay Makes Workers Happier Than Wages

A new study conducted by Standford University and the University of Toronto has found that workers who are paid hourly have a stronger relationship between money and happiness, proving that there is a link between work and earnings and how workers measure their value.

An hourly wage serves as a frequent and more effective reminder to workers of how much they earn. This in turn helps employees measure their value, which helps increase their levels of happiness. In short, getting paid by the hour instead of wages helps workers feel validated.

"If you are paid by the hour or account for your time on a timesheet, you begin to see the world in terms of money and in terms of economic evaluation," said Jeffrey Pfeffer, professor of organizational behavior at the Stanford Graduate School of Business. "To the extent that time becomes like money and money becomes more salient, the linkage between how much you earn and your happiness increases."

What Does That Mean in the U.S.?

While the U.S. work force is split almost equally, with about 50 percent paid by the hour and the other 50 percent paid a salary, there are other factors that have to be considered. You must also take into account your positions and the type of industry you work in, because upgrading from an hourly rate to a salary is not always better.

Why Salary Pay Is Not Always Better

For example, consider retail and restaurant workers vs. managers. The managerial positions often offer a salary which may seem better than the minimum wage you are getting paid or the tips you are making; but you have to factor in that you will work added hours and carry a greater set of responsibilities.

Not only do the extra hours as a manager decrease your hourly rate (if you are managing a restaurant you are not making tips, which can actually decrease your take-home pay), but the extra stress from the added responsibilities seldom makes workers feel happier.

For other industries such as education, a teacher's salary may seem like excellent pay when you break it down into an hourly rate, but don't forgot to factor in the extra hours that teachers spend doing work outside of "school hours." Suddenly, your pay is not looking as spectacular as you thought it would.

If you look at hourly workers, you will find two different levels of workers. There is the lower level for minimum-wage employees at places like Walmart, the Gap or Starbucks; and then there is the higher level of hourly workers, such as consultants and freelancers who charge high hourly rates for performing a highly specialized skill.

Pros of Both Forms of Payment

This study calls attention to some excellent information about our workplaces -- and more important, our pay. There are positives to both forms of payment; it often just depends on you as a person and the industry in which you work.

  1. Salary workers often enjoy more permanent jobs than hourly workers, thereby offering a greater sense of job security. Managers on salary are usually kept on while hourly workers are let go.

  2. For hourly workers, knowing precisely what you make can offer you an immediate sense of satisfaction because you are getting paid for the exact work that you do.

Whether your pay comes from an hourly wage or a salary, be happy you have a paycheck to take the the bank.

Curious to find out average salary for your position? Check out PayScale.com.

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