They don’t really care about us: the impact of perceived vertical pay disparity on employee well-being

Abstract

ABSTRACT The gap in pay between those at the top of organizations and other organizational members continues to grow. In this paper, we tested the link between the perception of this vertical pay gap and people’s well-being at work. Specifically, we tested whether greater perceptions that pay is unequally distributed couples with people’s feelings that they are not valued (Lind & Tyler, 1988), eroding their sense of identification and well-being. In two cross-sectional surveys, Study 1a and 1b (N = 1335), we found that the more US and Italian workers perceived that there was a large vertical pay gap at work, the greater their tendency to feel that their organization was not concerned about their welfare. They were also less satisfied in their jobs and less likely to identify with their organization. In two pre-registered experiments, Study 2a and 2b (N total = 785), we manipulated the vertical pay gap in hypothetical organizations and found that when the pay gap was large (versus small) participants felt that the organization was less concerned about their welfare. They also expected to be less satisfied in their jobs, to identify less with the organization, and to experience greater work-life interference.