Think You Know What the Other Half Earns? Not So Fast
WHY YOU SHOULD CARE
Because you should know the worth of your work.
You’ve probably never tried to guess how much money your doctor or the janitor who cleans your office makes, but chances are that if you did guess, you’d be wrong. A recent survey of 2,075 Americans conducted by the salary data company Paysa reveals that most had no clue how much those in other professions make. For example, participants guessed that members of Congress earn $87,499.50 per year. Only if we turn the clock back 30 years:
Members of Congress make twice as much ($174,000) as survey respondents thought.
Lowball expectations extended to other high-end occupations. Survey respondents thought that medical doctors make $124,999.50. With health care costs as high as they are? Look up, look way up:
Medical doctors earn 60 percent more ($202,450) than respondents guessed.
As for CEO salaries, the survey revealed a couple of surprises. Even though absurdly high executive compensation has been populist fodder for decades, respondents’ guesstimates and the harsh reality are both far from the world of Billions. Respondents figured that residents of the corner office make $124,999.50. Once again, better up the ante:
CEOs haul in 30 percent more ($185,850) than survey estimates.
In part, our inability to guess the salary of others can be blamed on the secrecy we’ve built around our income levels. Unless you work for the U.S. government or a union that posts employee salaries, most people are tight-lipped about their compensation. “In the United States, we have a tendency to try not to let people know precisely what we are making because it gives people the ability to assess our merit or personal worth,” says Hilary Silver, chair and professor of sociology and public policy and public administration at George Washington University in Washington, D.C.
The company we keep also colors our perceptions about salary because we tend to compare ourselves to the people around us. “When we think about household finance, we generally understand it through the prism of our own situation,” says Joseph Nathan Cohen, assistant professor of sociology at Queens College in the City University of New York and author of Financial Crisis in American Households. Because most of us don’t have exposure to people at either end of the economic spectrum, it’s much harder for us to estimate their salaries.
In comparison, survey participants were much more accurate in their estimates when asked about compensation for police officers, secretaries and cashiers. Cohen speculates that just about everyone knows a cop or a secretary and “[t]hose salaries are at the income scale where a lot of society sits.”
That accuracy didn’t extend to the educational field. Survey respondents guessed that a substitute teacher earns $40,000. They blew that answer:
The salary of a substitute teacher ($29,630) is 25 percent less than the survey guesstimate.
We also have a blind spot when it comes to estimating our own worth. “Most people in America see themselves in the middle,” Silver says. This misconception can make us blissfully unaware of the economic inequality in our country. For instance, most Americans earning six figures have no idea what it’s like to be in the bottom 50 percent of the income bracket. This leads to such myths as poor people would be able to pay their medical bills if they didn’t squander their money on things like cell phones, Cohen says. And, he notes, it also means that poor people don’t realize how much better off other people are financially.