Happy Place

Based on research by Erik Dane and Jennifer M. George

• Researchers have paid relatively little attention to the effect of pay and job security on worker happiness.
• Articles on the subject tend to be written from the viewpoint of management.
• Scholars who really care about employee well-being should look at the role of economics in workplace satisfaction.

Gyms, yoga, juice bars — there are a lot of ways twenty-first century businesses compete to amuse and refresh their employees. And a cottage industry of scholarly research has arisen to advise them on how best to do so.

Despite the abundant literature on worker happiness, however, scholars often overlook how employee pay and job security fit into the equation, write Emeritus Professor Jennifer M. George and former Professor Erik Dane, at the business school. If scholars truly care about employee well-being, George and Dane argue, they need to look at the role of economics.

In particular, the scholars take issue with Aharon Tziner, Erich C. Fein and Assa Birati’s article “Tempering hard times: Integrating well-being metrics into utility analysis” in the December 2014 issue of Industrial and Organizational Psychology: Perspectives on Science and Practice.

By ignoring the impact of economic issues, the Rice professors argue, Tziner and colleagues neglect a core component of workplace satisfaction. Since the 1970s, economic inequality in the United States has vaulted upwards as workers have struggled with periods of high unemployment. Layoffs are no longer used as last-ditch efforts to save troubled companies, but rather as short-term tools for boosting profits.

Economic markers tell the story bluntly. Census Bureau statistics released in fall 2016 showed the U.S. poverty rate to be 13.5 percent, meaning 43.1 million Americans lived in poverty (defined as a family of four with an income below $24,257). Many workers now face long-term unemployment or job instability. Although in March 2017 the Bureau of Labor Statistics reported the unemployment rate being at a near four-decade low of 5.4 percent, many observers argue that these figures only reflect people who have looked for work in the last four weeks, and omits hundreds of thousands of “discouraged workers” who have given up looking for work entirely.

Metrics of employee well-being, George and Dane write, need to take such factors into account. Unless employees make enough money to meet their needs, the researchers argue, finding meaning in work becomes problematic. Yet such metrics rarely surface in research or in strategic decision-making. Though authors of previous articles have cited shareholders as critical stakeholders, they have rarely acknowledged that workers are stakeholders too.

Even those scholars who see employees as central to an organization tend to focus on the role of worker well-being on business. Consider the research on “dysfunctional turnover,” when workers quit of their own volition or lose their jobs during downsizing. Researchers typically address the fallout: flagging performance among workers left behind, the costs of recruiting new workers, lost customers, overtime pay — and disturbances in the normal functioning of the whole organization. What they don’t mention is the devastation that layoffs wreak on those who lose their jobs.

The scholarship, in other words, flows from a shareholder point of view. The ramifications considered — lower production, investment declines, financial disarray — are biased toward the organization.

In the past, many scholars have proposed using economic metrics of employee well-being to counter that bias. But even when used, those metrics typically describe that well-being as it relates to performance and productivity. Employee well-being is rarely treated as an important issue in its own right.

New scholarship, George and Dane argue, should take into account how layoffs and job instability affect employees and their families. The fear, uncertainty and deprivation that go with job insecurity often have long-term effects on the worker. They also have consequences for children, ranging from homelessness and hunger to mental and physical illness.

Gyms, yoga and juice bars all reflect the growing consciousness that the health of workers guides the health of business. But perks won’t cure the economic bloodletting related to low pay or, worse, job loss. For academics in the business of studying business, there’s far more to learn about what U.S. workers really need to be happy.

Jennifer M. George is the Mary Gibbs Jones Professor Emeritus of Management in Organizational Behavior

Erik Dane is a former professor and was the Jones School Distinguished Associate Professor of Management in organizational behavior at Rice Business.

To learn more, please see: George, J. M., & Dane, E. (2014). Taking a deeper look at hard times and worker well-being. Industrial and Organizational Psychology: Perspectives on Science and Practice, 7(4), 573-576.