The workplaces of the future are dominated by amenities like ping-pong tables and flex time, but how much do these colorful perks really matter to employees? A lot, apparently: New research confirms that a significant number of American workers see non-wage job benefits as significant incentives—depending on who they are, that is.
A new working paper, published by the National Bureau of Economic Research, analyzes data from the RAND Corporation’s American Working Conditions Survey to explore the non-wage compensation for American workers beyond health insurance and pensions—things like telecommuting privileges, schedule flexibility, and free snacks, all of which “would not be considered monetary job benefits.” According to the researchers, the last comprehensive surveys on American working conditions beyond monetary benefits came in the ’70s, with the Quality of Employment Surveys of 1972–73 and 1979.
Using a measure of “willingness-to-pay”—the wage increase equivalent to a change from a job with zero amenities to one with a full slate of perks based on individual work preferences—the immediate results of the research are eye-popping: Transitioning from a job with zero amenities to one with a host of fringe benefits would, to a significant number of American workers, constitute the equivalent of a 56 percent wage increase. Indeed, 40 percent of respondents “preferred a lower-wage job with a flexible work schedule and telecommuting over a higher-wage job without those attributes,” while another 20 percent of respondents “preferred a higher-wage job with a relaxed environment and no team-based work over a higher-wage job without those attributes.”
But the overall value of these perks varies depending on who you are. For women, switching from the least perk-heavy job to the most is comparable to a 59.5 percent wage increase, compared to a 53.3 percent increase for men; for non-white employees, the switch is equivalent to a 50.5 percent wage increase, compared to a 57.6 percent wage increase for whites; with regard to education, those with a high school degree or less see only a 52 percent wage increase in the switch, while college-educated workers reported a 60 percent wage increase. Finally, in terms of age, the comparable wage increase from such a shift goes from 47.8 percent for those 25–34 to a whopping 74.3 percent for those older than 62.
All of this data indicates that it’s white, college-educated workers who generally get the most value out of non-monetary perks like flexible work schedules and in-office goodies. The reasoning for this is relatively simple, based on the research: With the exception of women, who are generally “more willing to trade off monetary compensation for on-the-job amenities than men,” white, college-educated workers are at such a relative advantage in terms of wages and other monetary compensation that perks are relatively appealing.
For everyone else, however, the ping-pongs and work-from-home packages of modern workplaces are a distraction from other benefits. Whites tend to place more value on intangible benefits like “hours flexibility, work autonomy, working alone, and being evaluated in teams” than non-whites, who, according to the research, “do not value being evaluated based on their own performance”—likely because African-American employees usually face far more scrutiny than their white colleagues from supervisors in a way that directly affects wages. Similarly, workers without a college education “place no value on telecommuting opportunities” for obvious reasons: It’s impossible to telecommute to a manufacturing gig.
“In general, the highest wage group appears to value job amenities more than respondents with lower wages,” the authors write. That makes sense: Having already maxed out on salary, white, college-educated men look now to “luxury” workplace benefits like snacks and ping-pong for additional value in an office setting.
The NBER data itself is fascinating as a broad, experimental examination of the non-monetary benefits that have only come into widespread use with the explosion of the American knowledge economy. But the data also indicates that throwing ping-pong and pizza at your employees is not necessarily a key to success; sure, the data broadly indicates that workers “have substantial willingness-to-pay for certain job amenities,” as the authors write, but those amenities have to actually correspond to preferences that vary across socioeconomic backgrounds to effectively substitute for traditional monetary benefits. Ping-pong, it seems, is not a one-size-fits-all perk.
And even then, no package of amenities can make up for other failures within a company. While the researchers argue their data shows “little evidence about compensating differentials associated with meaningful work”—i.e., the monetary value of the “do something you love” factor—consider this thoughtful essay by Jon Meyer in the Stranger, on the wild ride in a tech start-up:
We got free lunches on Fridays. We got an arcade machine, a ping-pong table, and beer kegs. We got standup desks and the choice of a Mac or a PC. Lucky Charms? Sometimes. I had made it, and it was exactly how I thought it would be … and then a bunch of us got laid off…. We’d done good work. We’d built a community, both within our walls and for our product. But that didn’t matter. Leadership wanted to pivot. Our disrupt wasn’t disruptive enough. The company could still be a unicorn, maybe, but at that moment, they’d decided to chop off part of their horn.
If that sounds about right, it should: No number of mini-kegs can wash down the taste of wage stagnation. A recent survey from the Pew Research Center indicates that, while the average American paycheck is larger than it was four decades ago, purchasing power has, for years, been stagnating for American workers. Chances are, most people would much prefer a few extra dollars on payday than ping-pong at the office.
