Values and Inequality: Prosocial Jobs and the College Wage Premium

Abstract

Employers often recruit workers by invoking corporate social responsibility, organizational purpose, or other claims to a prosocial mission. In an era of substantial labor market inequality, commentators typically dismiss these claims as hypocritical: prosocial employers often turn out to be no more generous with low-wage workers than are other employers. In this article, we argue that prosocial commitments in fact inadvertently reduce earnings inequality, but through a different channel than generosity. Building on research on job values, we hypothesize that college graduates are more willing than nongraduates to sacrifice pay for prosocial impact. When employers appeal to prosocial values, they can thus disproportionately reduce pay for higher-educated workers. We test this theory with data on online U.S. job postings. We find that prosocial jobs requiring a college degree post lower pay than do standard postings with exactly the same job requirements; prosocial jobs that do not require a college degree, however, pay no differently from other low-education jobs. This gap reduces the aggregate college wage premium by around 5 percent. We present a variety of supplementary evidence using labor market data, worker survey responses, and a vignette experiment with hiring managers. The findings reveal an unintended consequence of employers’ embrace of prosocial values: it offsets macro-level inequality.

The roles of experience and gender in shaping work values

“…However, studies investigating the relationship between experience and work values have produced mixed findings. Some studies suggest that individuals who have more education and professional experience value extrinsic factors more than intrinsic factors, whereas those with less education and professional experience value intrinsic factors more than extrinsic factors (Chillakuri, 2020;Warr, 2008;Wilmers and Zhang, 2022). Others report that those with more education and experience value intrinsic factors more than extrinsic ones (Kalleberg and Marsden, 2019).…”

Racial Inequality in Work Environments

“…For instance, Black job applicants are more likely to cast a wider net in their job search in response to discrimination (Pager and Pedulla 2015). In fact, groups most vulnerable to unemployment and economic insecurity—such as less-educated workers and racial minorities—could place higher importance on income and job security (Kalleberg and Marsden 2013; Wilmers and Zhang 2022). An inverse relationship between social class and the valuation of extrinsic rewards is well documented: individuals with better education and from higher socioeconomic classes tend to value personal learning, enjoyment at work, and other intrinsic job rewards more than those from more-disadvantaged backgrounds do (Johnson and Mortimer 2011).…”

“…Workers make tradeoffs when selecting jobs, balancing their preferences for wages against other job amenities. For example, workers may forgo higher-paying jobs in exchange for more meaningful work (Wilmers and Zhang 2022). The extreme version of this economic theory suggests that labor market inequality should be close to zero when all labor force utility is considered.…”

“…Many studies show that workers are concerned not only with extrinsic rewards such as wages and prestige, but also intrinsic rewards such as doing interesting tasks and having autonomy at work (e.g., Johnson and Mortimer 2011; Kalleberg and Marsden 2013; Morgan, Dill, and Kalleberg 2013; Mottaz 1985). Of course, some of these intrinsic rewards could be highly correlated with occupational attainment—jobs with higher status also generally offer more intrinsic rewards—but intrinsic rewards are also shaped by a firm’s specific culture and managerial style (Wilmers and Zhang 2022). In fact, surveys of employee preferences consistently show the importance of non-compensation-related job attributes.…”

“…This exclusionary process on the demand side could, in turn, shape behaviors on the supply side. Workers most vulnerable to discrimination and economic insecurity—such as racial minorities—could prioritize wage and job security over less-tangible dimensions such as culture and managerial relations (Wilmers and Zhang 2022).…”