If you had to guess, what do you think your co-worker makes? How about someone in your same field, but at a different company?
A new study from MIT, UC Berkeley, the University of Cologne, and the London School of Economics suggests that many people underestimate their colleagues’ incomes.
The study examined workers in Germany
It asked 516 part- and full-time workers in 2019 and 2020 how much they think they’d make if they had to find a new job in the same occupation within 3 months.
Most people believed they’d make about the same. The truth? They were actually underestimating others’ wages and their occupation’s median salary.
This is especially prevalent among employees in low-paying jobs
And these incorrect beliefs tend to keep workers from looking elsewhere while accepting lower wages.
The study claims that if workers knew the truth, 10% to 17% of jobs would no longer be viable without a pay hike.
How does this relate to the Great Resignation in the US?
Business Insider spoke with Nick Bunker, Indeed’s economic research director.
He said that while the German and US economies are similar, the countries handled the pandemic differently.
Germany subsidized payrolls, allowing workers to remain where they were, while many US workers lost their jobs and turned to unemployment.
This, coupled with companies advertising increasingly higher wages to court workers, could have motivated job changes.