Hourly Pay vs Salary

In: Business and Management

Submitted By mdupuy
Words 534
Pages 3
1. Introduction
Recent research suggests that people who are compensated with an hourly wage make different decisions about using their time than do people whose pay is not as explicitly time-dependent (DeVoe & Pfeffer, 2007a, 2007b). The argument is that when people paid by the hour think about their time in terms of money, they are more likely to adopt an economic evaluation lens when making decisions about spending time and, in particular, will devalue uncompensated activities. The fact that under conditions of hourly payment people primarily use economic criteria for decisions about time use stands in contrast to much research showing that people generally make decisions about money and time differently (e.g., LeClerc,
Schmitt, & Dube, 1995; Okada & Hoch, 2004; Soman, 2001).
As one example of this phenomenon, Evans, Kunda, and Barley (2004) found that technical contractors, who sold their services by the hour, became economic evaluators of time. With money and opportunity costs salient, contractors devalued non-compensated time and acted as if they were constrained in their decisions about taking time off from work. DeVoe and
Pfeffer (2007a) found that people in a nationally representative sample who were paid by the hour (compared to those not paid by the hour) or those in an experimental setting who were randomly assigned to calculate their approximate hourly wage rate (compared to those who did not) weighed the economic returns of spending time more strongly in making explicit tradeoffs between time and money, in that they were more willing to give up their free time to earn more money. Additionally, in a study investigating both attitudes and behaviors, DeVoe and Pfeffer (2007b) reported that people paid by the hour
(compared to those not paid by the hour) or those who calculated their hourly wage rate (compared to those who did not)
spent…...

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