Journal of Applied Psychology Copyright 198? by the American PsychoiogicaJ Association, Inc.

1987,m 72, No, 4,544-55! 0021-90IO/87/S00.75

Pay, Equity, Job Gratifications, and Comparisons in Pay Satisfaction

Leonard Berkowitz Colin Fraser and F. Peter Treasure

University of Wisconsin University of Cambridge, Cambridge, England

Susan Cochran
University of Wisconsin

In an investigation of the determinants of pay satisfaction, we held telephone interviews with 248
fully employed men in Dane County, Wisconsin, asking about their income, job satisfaction, and
other economic and demographic matters. The social and industrial-organizational psychology liter-
This article is intended solely for the personal use of the individual user and is not to be disseminated broadly.

ature suggests that pay satisfaction could be influenced by at least four major considerations: the
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economic benefits received on the job, the extent to which earnings are regarded as fair or deserved,
comparisons with other people's pay, and noneconomic job satisfactions. Measures of these possible
determinants were established by a factor analysis of 29 items, and the index of pay satisfaction was
based on another factor analysis of 8 items. Using these factors and several demographic variables
in a multiple regression analysis, we found that three of our four types of psychological determinants
made major contributions to predicting pay satisfaction, with the most powerful set of predictors
being equity considerations, although material benefits associated with living standards and intrinsic
job satisfaction were also major predictors. Social comparisons contributed virtually nothing. Small,
significant effects were found for age, occupation, education, and past unemployment. Theoretical
implications of the findings are discussed.

Satisfaction with pay, as with the attainment of any valued
outcome, is likely to be a function of several different processes.
At the simplest level, people could respond fairly directly to the
money itself. Earnings permit them to purchase the goods and
services they desire, and as a consequence, the greater their in-
come, the stronger should be their satisfaction. In a somewhat
more complicated manner, they might also evaluate their pay
in terms of a standard regarding these economic benefits. One
standard is a sense of equity. Are they getting what they deserve?
Another standard involves social comparisons. Is their pay as
much as someone else's? In this case, apparently, it is not the
absolute value of the earnings that is considered so much as the
degree to which this outcome meets the relevant standard. Yet
another process involves satisfaction with some other aspect of
their job. Positive feelings could generalize from, say, intrinsic
job satisfaction to their pay, or a conscious trade-off could be
accepted in which one satisfaction substitutes for another.
As we will show, on the basis of theoretical grounds and em-
pirical evidence, it is reasonable to expect that any or all of these
four distinguishable processes should influence people's sense
of satisfaction with their pay. To the best of our knowledge, how-
ever, these four plausible determinants have not been simulta-
neously examined in prior research. Furthermore, many stud-
This research was supported by a grant from the Vilas Foundation
of Madison, Wisconsin, to the first author, together with support from
Churchill College, Cambridge, England, to the second author.
We wish to thank David Good, Daniel Kate, Catherine Marsh, and
Susan Salkield for their helpful comments and assistance.
Correspondence concerning this article should be addressed to Leon-
ard Berkowitz, Department of Psychology, University of Wisconsin,
1202 West Johnson Street, Madison, Wisconsin 53706.
ies of pay satisfaction have, for practical reasons, used limited
segments of the work force, for example, employees of one large
firm or organization (e.g., Finn & Lee, 1972; Goodman, 1974;
Ronen, 1986) or one type or level of employee in a variety of
firms (e.g., Andrews & Henry, 1963; Dyer & Theriault, 1976).
Because of this restricted sampling, however, the generality of
the findings is not always clear. The results conceivably might
apply only to a particular type of employee or organization. In
examining the interplay of the four major types of processes in
wage satisfaction, it seemed desirable to us to first establish a
general picture by studying a random sample of a labor force
before undertaking more specialized studies of limited subsam-
ples. Such a procedure would permit the investigation of the
relative importance of the four psychological processes in the
context of a fuller set of demographic variations than has typi-
cally been available in previous studies. Our aim, then, was to
conduct an exploratory study of psychological processes and de-
mographic characteristics as determinants of pay satisfaction in
a random sample of full-time male workers in one labor market.
We will now consider the possible psychological mechanisms
in more detail. Several lines of evidence, having to do with the
absolute value of one's economic benefits, indicate that the
greater economic and social pleasures produced by a higher in-
come can at times override other considerations, such as
whether these earnings are just or fair. According to a number
of experimental tests of equity theory, for example, many per-
sons are willing to depart from principles of what is a just re-
turn, in order to obtain as favorable an outcome as possible for
themselves (e.g., Leventhal & Anderson, 1970). Their desire for
substantial benefits frequently outweighs their desire for an eq-
uitable return on their inputs. A number of studies (e.g., Dyer
& Theriault, 1976; Ronan & Organt, 1973; Schwab & Wallace,
1974), more directly relevant to pay satisfaction, have reported

544
 PAY, EQUITY, JOB, AND COMPARISONS
that people's wage level significantly predicts how satisfied they
are with their income, even without any measurement of dis-
crepancies from a supposedly fair level of pay. Higher earnings
give them a greater ability to enjoy what they want out of life
and are gratifying in themselves. However, it is worth noting, as
Motowidlo (1982) has observed, that the correlation between
income level and pay satisfaction is typically fairly moderate
(with the rs ranging from. 13 to .46). Frequently, other consider-
ations, besides the absolute value of one's earnings, also influ-
ence attitudes toward satisfaction with pay.
The most frequently discussed of these considerations has to
do with standards of justice and notions of what is a deserved
level of pay. As equity theorizing has long maintained (Adams,
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1965; Lawler, 1971), many individuals have some idea of what
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is a fair wage for them, and are bothered if their income does
not at least meet this minimum standard. Several writers have
suggested that equity standards determine what is the lowest
level of reward that would be regarded as fair or satisfying
(Messe&Watts, 1983;Thibaut&Kelley, 1959). The greater the
outcome above this minimum criterion, the more satisfying it
would presumably be (Messe & Watts, 1983).
There is a major (and still unresolved) problem here, however.
Equity analyses are united in assuming that dissatisfaction with
one's pay increases, the greater the wage's discrepancy from the
deserved pay level, but they disagree as to how much of this
latter standard rests on comparisons with other persons. For Ad-
ams (1965), Lawler (1971), and others (e.g., Crosby, 1976; Mar-
tin & Murray, 1983; Schwab & Wallace, 1974), the standard
used in deciding what is a just return is based to a great extent
on social comparisonsat times with a variety of different per-
sons (see Ronen, 1986). Presumably, people judge whether the
ratio of their outcomes to their inputs matches the outcome to
input ratios of other persons in similar circumstances, although
not necessarily in the same organization (Ronen, 1986). Several
lines of evidence attest to the role of these social comparisons.
Investigations in naturalistic settings have shown, for example,
that employees' satisfaction with their economic rewards is in-
fluenced to a considerable degree by a comparison with the re-
wards obtained by others (Goodman, 1974; Goodman & Fried-
man, 1971; Patchen, 1961). And similarly, in a laboratory ex-
periment, university students' sense of being unfairly paid
(when they received less money than they thought they de-
served) was exacerbated when similar others were given higher
wages (Messe&Watts, 1983).
Nonetheless, several theorists (e.g., Davies, 1962;Gurr, 1970;
Jaques, 1961) have proposed that judgments of what is a fair
return can also be affected by largely internal standards. In one
variation on this theme, both Davies and Gurr maintained that
political unrest frequently arises when there is a substantial dis-
crepancy between present outcomes and expectations based on
past outcomes, whereas in another version, Jaques (1961) ar-
gued that wage earners base their notion of what they deserve
largely on characteristics of their job. Following this internal
standards position, employees conceivably might believe their
job performance or any other input, such as their training and
experience, should determine their financial compensation
somewhat independently of what others in their organization
might be getting (Dyer & Theriault, 1976; Finn & Lee, 1972).
There is also another kind of ambiguity regarding the role of
545
social comparisons. Because of the way in which equity ideas
have been linked with social comparisons, it is often assumed
that these comparisons influence wage satisfactions only by
affecting judgments of what is a fair pay. This is an unduly re-
strictive conception. In his pioneering study of the psychology
of status, Hyman (1942) noted that people assess their position
on most social hierarchies by comparing themselves with cer-
tain other groups fairly directly and without considering what
is deserved or fair. Similarly, Festinger's (1954) theory of social
comparison processes makes no reference to fairness or justice.
His formulation holds that substantial discrepancies from sim-
ilar or attractive others will be bothersome independently of the
presumed fairness of the given ranking. Putting these argu-
ments together, wage earners could conceivably compare their
income with that of others in their social group without asking
whether anyone's pay was just. Independently of what anyone
might deserve, they theoretically try to determine whether they
are getting more, the same, or less money than their reference
group, and presumably would feel bad if they saw they were
earning less. What matters most is that they were not "keeping
up with the Joneses."
A fourth conceivable influence on pay satisfaction is the satis-
faction, or lack of it, derived from other facets of the job, such
as intrinsic satisfaction with the content of the work. One possi-
bility is that people engage in conscious trade-offs, sacrificing
some possible sources of pleasure for other gratifications. It is
well-known, at least to academics, that the main reason we aca-
demics are not all highly paid business executives is that we
are unwilling to give up the joys of the intellectual life and the
creativity and autonomy involved in seeking after truth. As long
as we can retain these intrinsic satisfactions, we are happy with
the lesser salaries of academia. Other groups of workers, with
less exalted sentiments and less choice in the labor market,
might consciously reconcile themselves to relatively low pay if
their hours are good and their surroundings are pleasant. An
alternative to such a cognitive analysis is that there is a general-
ization of feeling from one aspect of the job to another. Such
a generalization phenomenon is well-known, of course, and is
involved in many different domains of thought and behavior,
including cognitive consistency (Heider, 1958), the develop-
ment of attitudes (see, e.g., Clore & Byrne, 1974), and the in-
fluence of moods on judgments and behavior (Isen, 1984). How-
ever this phenomenon is manifested and, whatever it might be
termed in any specific instance, in all of these cases the affect
aroused by some event spreads to other salient features of the
situation. If such an effect influences attitudes toward one's in-
come, the pleasure (or reinforcements) people obtain from
some aspects of their lives (such as from the intrinsic nature of
their work) might color their opinion of their other life out-
comes. Feeling good about their job, they might feel good about
their pay.1
Despite these plausible grounds for expecting that some non-
pay aspects of work would affect people's satisfaction with their
1
This is not to say that the pleasure from the intrinsic aspects of the
job must invariably influence pay satisfaction. If the intrinsic gratifica-
tions are not very strong or if the employees' desires for high wages and
the benefits of high pay are relatively great, the generalization of feelings
from job to pay may not occur.
 546 BERKOWITZ, FRASER, TREASURE, AND COCHRAN
earnings, very few direct empirical studies of the possibility ap-
pear to exist (e.g., Weitzel, Harpaz, & Weiner, 1977). A routine
assumption has been that wage satisfaction will be one of a
number of determinants of more general job satisfaction
(Lawler, 1971). The possibility that aspects of job satisfaction
can influence pay satisfaction has been largely ignored.
Given all of the possibilities just discussed and the uncertain-
ties regarding the different processes that might be operating, it
is clearly still too early to offer a precise theoretical model of the
determinants of income satisfaction. We have essentially sug-
gested that four types of factors could affect people's satisfaction
with their earnings: (a) the magnitude of the economic benefits
they receive (such as the absolute value of their pay and the
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standard of living they enjoy because of their income), (b) their
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equity considerations (the discrepancy from the pay they think
they deserve), (c) social comparisons (that may or may not be
linked to ideas of a just wage), and (d) other satisfactions they
obtain from work (such as their satisfaction with the intrinsic
nature of their job). However, we cannot say which of these de-
terminants is most important or how they might be intercon-
nected. The present investigation is, therefore, only a prelimi-
nary exploration. Using measures designed to tap each of these
determinants, we ask whether any or all of them predict income
satisfaction. In addition, we assessed the relative contributions
of these determinants as compared with the contributions made
by a number of standard demographic characteristics of wage
earners.
Method
Sample
Following their standard procedure, interviewers at the University of
Wisconsin Survey Research Laboratory, in the autumn of 1981, made
1,210 telephone calls through random digit dialing and reached 768
actual phone numbers in the surrounding Dane County. If there was no
reply, interviewers called the number again until someone answered.
When the connection was with a noncommercial party, interviewers
identified themselves and asked to speak to a full-time employed adult
male over 18 years of age. (The sample was restricted to men partly
because of limited funds and partly because of our decision not to in-
clude part-time workers.) There was no adult man at the number called
in 165 instances out of the 609 completed noncommercial calls; a man
was available, but not working full time, in 130 instances. If a fully em-
ployed man was at the number but was not available at the moment, the
interviewer called back until that person could be reached. Of the 314
eligible cases, 66 refused to be interviewed, resulting in a total random
sample of 248 interviewed respondents (i.e., 79% of those eligible).
The sample was quite heterogeneous, despite the fact that Dane
County is the seat of both the state government and a major university,
and has a decided young, middle-class composition. Most of the respon-
dents were fairly young, although the sample as a whole had a wide
range of ages; almost one third were in their 30s and about 30% were 29
years of age or younger. About 19% of the men were in their 40s and the
remaining 18% ranged from 50 to 68 years of age. Of the men inter-
viewed, 8% had not completed high school and 38% were high school
graduates only. One third of the men had at least a college or university
degree, and about 10% had a professional degree (MD. DDS, JD, or
PhD). As another example of the heterogeneity of the sample, 38% re-
garded themselves as being in either the "working" or "lower" social
class and 56% indicated that they were members of the "middle" class.
Only 2% did not classify themselves.
There was also a considerable range in the men's reported annual
income: from about $5,400 to more than $70,000. Of the respondents,
7% either refused to report or said they did not know their income. Of
those who revealed their yearly pay, approximately one half indicated
that their income was about $21,000 or less, and about 14% said that
they had an annual income of more than $40,000.
In other respects, however, the sample was relatively homogeneous.
Reflecting the racial composition of Dane County, it was virtually all
White; only 7 nonwhite respondents were included. Two-thirds of the
men were married at the time of the interview, and only about 17%
had never been married. There was one other wage earner, besides the
respondent, in one half of the households in the sample, and about 39%
of the men indicated that they alone had any real income.
Interview
After telling the respondents that the survey had mostly to do with
people's views about their jobs and assuring them that their replies
would be confidential, the interviewer posed some 92 questions that
were mostly about the respondent's perception of and attitudes toward
his work and income. The interview schedule had been devised by the
first two authors. Most of the questions were fixed alternative items that
could be answered readily and quickly.2 Because of the structured na-
ture of the great majority of questions, one half of the interviews were
completed in 20 min or less and about 90% took one-half hour or less.
The remaining 10% of the interviews lasted as long as one hour.
Principal Measures
Incomplete data. To save as many cases as possible for the data analy-
ses, we decided to exclude only those respondents who had not answered
more than 10% of the questions. For those items constituting an explicit
continuum, missing data were filled in by inserting the mean on the
particular measure for the missing cases. However, because every ques-
tion did not provide such an explicit response continuum, the analyses
are based on different samples. The major regression analysis reported
below used 239 cases, whereas the factor analysis of the psychological
items involved 230 cases.
Data reduction. The interview schedule contained questions on is-
sues over and above pay satisfaction and its four likely psychological
precureois. There were, however, 37 questions that appeared to relate
to one or other of these five issues. Some data reduction was desirable.
First, we considered direct measures of pay satisfaction. The remaining
29 questions were then subjected to a factor analysis to determine
whether clusters of items reflecting our four conjectured psychological
issues could be obtained. An extracted factor was accepted only if its
eigenvalue was equal to or greater than one.
Pay satisfaction. Two items asked about overall pay satisfaction, and
six items attempted to explore different aspects of wage satisfaction. All
eight were subjected to a principal component analysis without rota-
tion. The analysis extracted one component that accounted for 66.2%
of the variance. The loadings of the eight items varied from .86 to .69.
Although some investigators (e.g., Weiner, 1980) have used measures of
different kinds of pay satisfaction, these results clearly showed that all
of the items inquiring into respondents' satisfaction with pay clustered
in a single component.
2
Standard attitude assessment scales such as the Minnesota Satisfac-
tion Questionnaire were not used in this investigation because we
wanted a relatively small number of items that would be suitable for our
broad range of respondents employed in a wide variety of occupations.
We believed that some of the job and pay aspects assessed by these stan-
dard scales could safely be ignored in the present exploratory study.
 PAY, EQUITY, JOB, AND COMPARISONS 547

Table 1
Rotated Factor Loadings of Each Item

Factor and item Eigenvalue 1 2 3 4 5 6 7 8 Communality

1. Social Comparison Frequency with 7 .20

Others paid same .91 .01 .03 -.06 -.03 -.00 .03 -.02 .85
Particular groups .91 .01 -.04 -.05 -.00 .02 -.08 .02 .85
Others paid more .91 .04 -.09 -.02 -.02 .05 -.04 .02 .83
Others paid less .91 -.01 .05 -.01 .02 -.04 -.07 -.00 .84
People in other occupations .89 .02 .00 .04 -.09 .02 -.09 .07 .81
People in other organizations .88 -.04 .02 .02 .09 -.01 .05 -.04 .78
Certain other individuals .88 -.02 -.03 .05 -.03 .07 .06 .08 .77
People in same occupation .84 -.01 -.05 -.05 .09 -.05 .01 -.07 .73
People in same organization .84 -.00 -.01 .04 -.06 -.07 .14 -.03 .73
2. Intrinsic Job Satisfaction 4.14
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Work interesting -.01 .87 .01 -.01 -.19 .04 -.04 .08 .76
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Can use special abilities .03 .83 -.05 -.06 .05 -.12 -.07 .02 .76
Satisfaction with job in general -.07 .73 -.25 .02 .15 -.10 -.07 -.04 .70
Supervisors treat me well .05 .54 .20 .04 -.05 -.21 .07 .14 .48
Promotion chances good -.00 .53 .16 .05 .33 -.05 .27 -.22 .57
3. Current Inequity 1.78
Difference from deserved pay/yearly pay -.04 .10 .71 -.07 -.34 .17 .30 .15 .72
Yearly pay .13 .30 -.59 -.08 -.13 .16 .14 .09 .54
Getting pay deserved -.07 -.02 -.54 .10 .27 .20 .38 .07 .63
Unfair certain others paid same .08 .08 .51 -.01 .28 .42 -.09 -.08 .56
4. Total Household Income 1.45
Household income -.05 .01 -.02 .77 .03 .07 -.18 -.04 .64
Part-time income .01 -.04 -.02 .75 -.17 -.14 .23 .07 .66
5. Non-Pay Economic Benefits 1 . 36
Fringe benefits good .01 -.09 -.03 -.12 .77 -.07 .14 .12 .65
Job security good -.09 .17 -.07 .03 .61 -.06 -.04 .17 .52
6. Satisfaction with Work Environment 1 .28
Coworkers pleasant .08 .13 .05 .06 .06 -.76 .01 -.05 .65
Physical surroundings pleasant -.05 .11 -.02 -.03 .10 -.74 .02 .09 .65
7. Future Equity 1.27
Future chance of getting deserved pay .09 .01 .08 .21 .16 -.01 .75 -.05 .64
Unfair, certain others paid more .10 .02 .13 .32 .08 .12 -.67 -.06 .64
8. Quality of Life 1.13
Own standard life versus parents' -.07 -.02 -.08 -.01 -.02 -.06 .08 .73 .59
Work hours good .12 -.01 .20 -.02 .18 -.03 -.13 .69 .55
Satisfactory standard of living -.09 .30 -.21 .11 .11 .11 .06 .48 .52

Factor Analysis of Predictor Items
The factor analysis with oblique rotation of the remaining 29 items
(using the OBLIMIN option on SPSS") extracted eight factors, which in
total accounted for 67.7% of the variance. Table 1 summarizes these
factors and lists the loadings of each item, after rotation, on the factors.
Because we had been especially interested in the possible role played
by social comparisons, nine items asked how frequently respondents
compared their pay with others of different types. All of these questions
entered into Factor 1, Frequency of Social Comparisons. Thus, some-
one who claimed to make comparisons with people in his own organiza-
tion was also likely to say that he made comparisons with people in other
organizations, in the same and different occupations, with those who
were paid more and with those paid less, and so on. Although some
researchers (e.g., Ronen, 1986) required their respondents to differenti-
ate between comparison groups, in the light of these data it would be
unjustified in future research on the selection of comparison others to
assume that different types of comparisons are necessarily mutually ex-
clusive.
Factor 2 was composed of five of the eight items dealing with job
satisfaction. The items loading highest on this factor had to do with the
extent to which the work was interesting and gave the men an opportu-
nity to use their own special abilities, and we therefore regarded the
factor as a measure of the respondents' satisfaction with the intrinsic
aspects of their jobs.
Factor 3 involved the degree to which the men viewed their current
pay as inequitable. The item with the highest loading was a quantitative
index composed of the difference between the pay they believed they
deserved and their present (annual) pay divided by their annual wage.
Weiner (1980) had found that this measure, which she termed relative
equitable pay, correlated more highly with her index of pay satisfaction
than was the absolute difference between received and deserved pay.
However, the respondents' actual yearly pay was also related (moder-
ately negatively) to this current inequity factor, indicating that those
who were relatively poorly paid tended to see their wage as unfair. The
remaining two items in this factor had to do with the extent to which
the men thought they were getting the pay they deserved and whether
they believed it was unfair that certain other people were paid the same.
The next two factors were economic in nature. Factor 4, Total House-
hold Income, consisted of the total (1981) income of all of the members
of the men's household, as indicated in response to a direct query, plus
the amount of income said to be earned in any part-time work done by
household members. Factor 5, on the other band, did not involve money
directly. Based on two job-related questionswhether the fringe bene-
fits and job security were goodFactor 5 was termed Non-Pay Eco-
nomic Benefits.
 548 BERKOWITZ, FRASER, TREASURE, AND COCHRAN
Table 2
Factor Correlation Matrix
Factor
1. Social Comparison Frequency .02
2. Intrinsic Job Satisfaction
3. Current Inequity
4. Total Household Income
5. Non-Pay Economic Benefits
6. Satisfaction with Work Environment
7. Future Equity
8. Quality of Life
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Factor 6 had to do with the respondents' jobs also, but focused on the
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work environment. The two items loading heavily on this factor were
the men's ratings of how pleasant were their coworkers and their job
surroundings. Factor 7, again, had to do with equity considerations.
Unlike the forementioned Current Inequity factor, however, this partic-
ular cluster seemed to be oriented toward the future; the item with the
highest loading asked the men to indicate what they thought the chances
were that they would be getting the pay they deserve 5 years from now.
Finally, Factor 8 was interpreted as a measure of the men's Quality of
Life. The three items in this factor asked about (a) the difference be-
tween their own and their parents' standard of living, (b) whether they
thought their work hours were good, and (c) how satisfied they were with
their present standard of living.
In sum, all four proposed psychological determinants of pay satisfac-
tion were reflected in the factors that were isolated from among the 29
predictor items. The economic benefits that the men obtained from
their work were tapped by Factors 4 (Total Household Income) and 5
(Non-Pay Economic Benefits), and perhaps Factor 8 (Quality of Life),
as well. Equity considerations were involved in Factors 3 (Current Ineq-
uity) and 7 (Future Equity). Noneconomic job satisfactions were mea-
sured by Factors 2 (Intrinsic Job Satisfactions) and 6 (Satisfaction with
Work Environment); and social comparison processes were assessed by
Factor 1 (Social Comparison Frequency). Note also that although an
oblique rotation was carried out in the factor analysis, the factors have
only relatively low correlations with each other, as is shown in Table 2.
Intrinsic Job Satisfaction tended to be most strongly related to other
factors, but even here, although significant, the correlations were not
great: re = .23 with Quality of Life, -.20 with Satisfaction with Work
Environment, .16 with Non-Pay Economic Benefits, and .16 with Fu-
ture Equity. The other factors generally had much lower intercorre-
lations.
All 29 items were used in calculating the scores for each respondent
on each of the eight factors by weighting the items by their factor score
coefficients.
Demographic variables. We sought also to determine whether a num-
ber of demographic variables made any significant contributions to the
prediction of pay satisfaction. These were (a) age, in years; (b) length of
time with the present company or organization, in months; (c) educa-
tional level, in terms of eight levels ranging from the noncompletion of
high school to the receipt of a doctoral degree; (d) self-assigned social
class: upper, middle, working, or lower; (e) occupational level, nine lev-
els from professional to unskilled laborer, (f) member of either union
or professional association, or neither, and (g) unemployment experi-
ence for at least 1 month: yes or no.
Although we did not have an overall theoretical analysis of the possi-
ble influence of these variables, other research (see, e.g., Lawler, 1971),
as well as intuition, suggested that they might well contribute to pay
satisfaction, and could do so in two different ways. For one, the demo-
graphic variables might represent more distal causes that exert their
influence on pay satisfaction via more proximate psychological causes.
.09 -.02 -.02 .01 -.04 -.05
-.06 .07 .16 -.20 .16 .23
.00 -.05 .05 -.12 -.10
.04 -.02 .03 -.05
-.06 .04 .05
-.07 -.09
.10
Significant effects of the demographic variables that are independent of
the present eight psychological factors might then indicate that addi-
tional psychological causes other than those assessed in this study re-
main to be identified. Thus, age, length of time with the present organi-
zation, and perhaps even prior experience of unemployment might all
promote a relatively passive acceptance of one's current employment
situation. As a consequence, higher values on these three demographic
variables would contribute to greater pay satisfaction independently of
the psychological considerations reflected in our factors. Educational
level might also operate independently of these factors by decreasing
this passive acceptance. The better educated persons could believe that
they have more alternatives to their present job and so are less content
with their wage, whatever it happens to be. Alternatively, at least some
of the demographic variables could lead to pay satisfaction by means of
the psychological determinants we have identified. Higher educational
and occupational levels and higher social status might promote more
frequent and more extensive social comparisons, for example. In engag-
ing in these comparisons fairly readily, then, the people with more edu-
cation those who are in more prestigeful jobs, or those who believe they
have higher social status might discover that others earn more than they
do, and become dissatisfied. Alternatively, these particular demographic
characteristics could conceivably be viewed as "investments" that de-
serve greater economic returns. High values on these variables, there-
fore, might lead to a sense of inequity, which, in turn, produces dissatis-
faction with one's pay.
These possibilities indicate that we had no single theoretical rationale
for specific predictions regarding the relations between the present de-
mographic variables and pay satisfaction. There was one matter about
which we were fairly certain, however. In considering the psychological
determinants as proximal causes of wage satisfaction and the demo-
graphic variables as distal causes, we expected the psychological factors,
collectively, to make a far greater contribution to pay satisfaction.
Results
Regression analyses were carried out to determine the extent
to which all of the measures previously described contributed
to pay satisfaction. We explored first the importance of the psy-
chological factors versus the demographic variables by carrying
out a two-step regression analysis in which all eight psychologi-
cal factors were entered in the initial step and all seven demo-
graphic measures were entered next. In this procedure, the for-
mer factors yielded an R of .75 (R2 = .56) with pay satisfaction.
The addition of the demographic variables in the second step
resulted in only a slight improvement in the prediction. The R
rose only to .80 (R2 = .64), and the jR2 of the increment was
small (.08), although significant, F change (7, 223) = 6.83, p <
.00005. Reversing the order of entry of these measures led to a
 PAY, EQUITY, JOB, AND COMPARISONS 549

Table 3 In accord with the previously reported exploratory analyses,

Beta Weights of Measures in Prediction of Pay Satisfaction the demographic variables were generally less important than
our psychological factors; only four of the seven demographic
Measure 0 SE0 items contributed significantly to the prediction of pay satisfac-
Current Inequity (F3) -.49 .04 -11.24 <.00005 tion, and their beta weights were fairly small. Age, as expected,
Intrinsic Job Satisfaction (F2) .41 .05 8.31 =.00005 was positively related (0 = .15), but occupational level had a
Non-Pay Economic Benefits (F5) .34 .04 8.12 <.00005 negative relation with the criterion (0 = . 14); men in the higher
Quality of Life (F8) .30 .05 6.41 c.00005 status occupations tended to be less satisfied with their pay. Ed-
Future Equity (F7) .28 .04 6.71 <.00005
ucational level and unemployment experience were also nega-
Occupational level" .15 .06 2.65 <.01
Age .14 .06 2.41 <.02 tively related to pay satisfaction (both /3s = -.12).
Educational level -.12 .05 -2.18 <.03
Unemployment experience -.12 .04 -2.72 <.01
Discussion
Total Household Income (F4) .10 .04 2.31 <.02
Psychological Determinants
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Nonsignificant predictors
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Work Environment (F6) -.07 .04 Although the present findings are somewhat unexpected in
Member work association -.06 .05 several respects, in other ways they are consistent with pub-
Social Comparison Frequency (Fl) -.05 .04 lished research and theory. Most notably, the results lend some
Social class .003 .05 support to prevailing thinking about the importance of per-
Time with organization -.002 .06
ceived equity as a determinant of pay satisfaction (e.g., Lawler,
Note. R1 = .64; F( 15,223) = 26.24, p < .00005. F = Factor. 1971). The more strongly the men believed they were receiving
* Low scores on this variable indicate higher occupational status. the pay they deserved, and the smaller the discrepancy between
their reported income and the income they thought they de-
served relative to their actual pay, the more satisfied they were
similar picture. In this case, the seven demographic variables in
with their earnings.
the first step gave rise to a significant R of .48 (R2 = .23), but
The regression analysis also indicates that a sense of equity
the inclusion of the eight factors in the next step improved the
was a stronger predictor of pay satisfaction than were the mate-
prediction of pay satisfaction greatly: the R, obviously, was
rial benefits. However, the factor analysis raises a question about
again .80, but the R2 of the increment was now .41, F change
such a simple assertion. Yearly pay was sufficiently strongly cor-
(8, 223) = 31.41, p < .00005. All in all, it appears that the psy-
related with the individual equity items to load strongly (-.59)
chological factors were more important than our demographic
on the Current Inequity factor. This suggests that equity consid-
variables, and it may be that the latter tended to affect pay satis-
erations are not wholly independent of actual pay, even if in
faction largely, although not solely, through the psychological
principle they might be. It is, in fact, misleading to pit material
considerations assessed by the factors.
benefits against nonmaterial feelings of equity, as if they were
More detailed information about the relative contributions
mutually exclusive. Our study shows that, in part, they are re-
made by each of our measures can be obtained from Table 3,
lated and that, in part, they both make substantial and indepen-
which summarizes the regression analysis involving all 15 vari-
dent contributions to pay satisfaction.
ables. Table 3 lists the resulting beta weights in the prediction
One respect in which Lawler's (1971) model needs qualifying
of pay satisfaction, with their standard errors and significance
is that it assumes that all potential determinants of pay satisfac-
levels.3
tion operate via equity calculations. The most immediate deter-
Table 3 clearly shows that five of the eight psychological fac-
minant of pay satisfaction supposedly is a comparison between
tors contributed substantially to the prediction of pay satisfac-
one's deserved and one's actual pay. By contrast, our findings
tion and, furthermore, that these factors tapped three of the
reveal that other considerations, such as the material benefits
four classes of psychological determinants we have proposed.
obtained through one's earnings and job satisfaction, make in-
The men's beliefs as to whether their wages were fair seemed to
dependent contributions toward pay satisfaction.
be the most important of all. They were especially apt to have
Intrinsic job satisfaction is a third important but apparently
relatively little satisfaction with their pay if they were high on
neglected predictor of pay satisfaction. The extent to which that
Current Inequity (0 = -.49) but, on the other hand, tended to
relation depends on a conscious trade-off of the two sets of bene-
be happier with their present earnings if they thought there was
fits or on the direct generalization of affectas discussed in the
a good chance that they would get the pay they deserved in the
beginning of this articleremains to be studied.
future (ft = .28). Intrinsic Job Satisfaction was somewhat less
One surprising finding has been the consistent failure of so-
important than Current Inequity (ft = .41) but contributed
cial comparisons to play any significant part in directly predict-
rather more to the prediction of our criterion measure than did
ing pay satisfaction. As we stated, although most social psycho-
either of the economically oriented indices separately: Non-Pay
Economic Benefits (0 = .34) and Quality of Life (0 = .30). Inter-
estingly, the factor based most clearly and most directly on 3
The possibility cannot be excluded that similarities and differences
money, Total Household Income, was the least important of all in item formats may have made some contribution to these findings.
our predictors (0 = .10). It is also worth pointing out that the Note, however, that all psychological items did not have formats similar
Social Comparison Frequency factor did not make a significant to the items assessing pay satisfaction, and among psychological items
contribution to the prediction equation at all. with similar formats several different factors were identified.
 550 BERKOWITZ, FRASER, TREASURE, AND COCHRAN
logical discussions in this area maintain that income satisfac-
tion is directly affected by social comparisons, some analyses
suggest that satisfaction with this outcome need not be influ-
enced by such comparisons. If accepted at face value, our find-
ings indicate that the taken-for-granted centrality of compari-
sons with other individuals or groups merits a closer, more criti-
cal consideration. A person could determine how well off he or
she is in the world in ways other than through the conventionally
assumed social comparisons, particularly outside the labora-
tory. In the case of pay, one might evaluate his or her earnings
by judging them against expectations based on earlier income
(Messe & Watts, 1983) or, as Goodman (1974) has pointed out,
on company policies or self-conceptions. For that matter, as we
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have proposed, satisfaction with income might even be influ-
This document is copyrighted by the American Psychological Association or one of its allied publishers.
enced by feelings toward other aspects of work through a gener-
alization process. After a delicious meal, the world can seem a
very satisfying place, particularly if the good food is accompa-
nied by good wine; it is quite unnecessary to check that one's
own meal was better than anyone else's. But even when social
comparisons do affect wage satisfaction, they may do so through
comparisons that are not usually considered in the pay-satisfac-
tion literature. According to our results, a man might match the
standard of living his earnings now bring him with the standard
of living his parents had experienced when he was a child.
On the other hand, conventional social comparisons should
not be too readily ignored. Our assessment of social compari-
sons consisted of a series of questions about how frequently
comparisons were engaged in. We did not establish what indi-
viduals discovered about their pay compared with that of others
or how they felt about what they learned. It may well be that a
more elaborate analysis of comparison processes would reveal
that social comparisons are related to pay satisfaction because
they determine either feelings of equity or, alternatively, judg-
ments of material well-being and standard of living.
What is clear from our study is that almost two thirds of the
variance in direct expressions of pay satisfaction from a random
sample of full-time male workers can be predicted from mea-
sures of equity, material benefits, and intrinsic job satisfaction,
together with a handful of simple demographic variables.
Demographic Variables
Our findings suggest that four demographic variablesage,
education, occupational level, and experience with unemploy-
mentimprove the prediction of pay satisfaction beyond that
obtained with the psychological variables, although only to a
relatively small extent. One of these relations is fairly straight-
forward. As might be expected, older respondents were more
satisfied with their pay. The other results are somewhat more
surprising. Higher educational level was associated with lower
satisfaction with pay, a finding that has been noted elsewhere
(Klein & Maher, 1966). And moreover, although occupational
level is significantly correlated with educational level (r = .59),
it made its own significant contribution to the prediction of pay
satisfaction, and in the same direction as educational level. Men
at the higher levels were more dissatisfied with their pay than
were the men at the lower levels. Because neither educational
nor occupational levels were correlated with the Current Ineq-
uity factor, these variables evidently did not contribute to pay
satisfaction through equity considerations. It seems more likely,
we believe, that they operated through a process we had not
anticipated at the start of our research. The respondents might
have thought that higher educational and occupational levels
increased their job opportunities so that those at the higher lev-
els did not have to accept their current pay in a relatively passive
manner. They could look elsewhere for employment.
Another somewhat unexpected predictor was past experience
of unemployment. Psychologically, one might have expected
unemployment experience to be positively associated with pay
satisfaction, on the assumption that any pay is more satisfying
than no pay. In fact, our finding was the opposite: Those with
past experience of unemployment were less satisfied with their
current pay.
Our assumption is that, in general, demographic variables
are distal influences on individuals' actions and experiences and
they exert their influence through proximate influences cap-
tured by psychological variables. The fact that four demo-
graphic variables improved, albeit modestly, the prediction of
pay satisfaction suggests to us that some psychological variables,
in addition to those we have studied, remain to be identified
before a complete account of pay satisfaction can be offered.
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241 -311). Lincoln: University of Nebraska Press. Received October 21,1985

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Schmitt Appointed Editor, 1989-1994

The Publications and Communications Board of the American Psychological Association an-
nounces the appointment of Neal Schmitt, Michigan State University, as editor of the Journal
of Applied Psychology for a 6-year term beginning in 1989. As of January 1, 1988, manuscripts
should be directed to

Neal Schmitt
Department of Psychology
Psychology Research Building
Michigan State University
East Lansing, Michigan 48824

Manuscript submission patterns for the Journal of Applied Psychology make the precise date
of completion of the 1988 volume uncertain. The current editor, Robert Guion, will receive
and consider manuscripts until December 31, 1987. Should the 1988 volume be completed
before that date, manuscripts will be redirected to Schmitt for consideration in the 1989
volume.