Salary Growth Research Articles

Is expatriation good for my career? The impact of expatriate assignments on perceived and actual career outcomes

This study examines the impact of expatriate assignments on career growth and the external marketability of US employees of a large professional services firm. We use survey and archival data to compare expatriates currently overseas, repatriates, and domestic US employees on compensation, recent promotions, and external recruiting contacts. We then examine how actual pay, promotions, and external recruiting influences anticipated salary growth within the firm and external employment opportunities. We find that despite little or no impact on their current careers, employees with overseas work experience perceived greater internal and external opportunities than domestic US employees. Implications for managers and researchers are discussed.

For How Long Will Defined Benefit Liabilities Continue to Grow?

Many pensions' markets are experiencing a transition from Defined Benefit (DB) to Defined Contribution (DC) schemes, with most of the former being closed, frozen or wound up. Against this backdrop this paper aims to calculate the DB market's future growth, but approaching the problem from the liabilities' side. We develop a general model whereby we can project DB liabilities based on the expected future trends in longevity, membership dynamics and salary growth. We then can deduce the expected future evolution of DB liabilities, which if tied to assets, may be seen as an approach to predict the pension asset management market in the future. We apply this model to the UK pensions market. The main result is that even if all UK DB schemes are considered closed, DB liabilities still show a growing trend until the year 2017, reaching a maximum of 39% above their current level and only returning to their current level around 2035.

For how long will defined benefit liabilities continue to grow?

Many pension markets are experiencing a transition from defined benefit (DB) to defined contribution (DC) schemes, with most of the former being closed, frozen or wound up. Against this backdrop, this paper aims to calculate the DB market's future growth, but approaching the problem from the liabilities' side. We develop a general model whereby we can project DB liabilities based on the expected future trends in longevity, membership dynamics and salary growth. We then can deduce the expected future evolution of DB liabilities, which, if tied to assets, may be seen as an approach to predict the pension asset management market in the future. We apply this model to the UK pensions market. The main result is that even if all UK DB schemes are considered closed, DB liabilities still show a growing trend until the year 2017, reaching a maximum of 39 per cent above their current level and only returning to their current level around 2035.

Deferred compensation for career employees in public defined benefit pension plans: evidence from Colorado PERA

SUMMARYWith significant under funding of public defined benefit pension plans, public debate often focuses on funding problems, neglecting benefit-side factors that contribute to under funding. In this study we examine the benefit side by calculating the value of deferred compensation, using a unique dataset of salary histories for recent university retirees covered by the Colorado Public Employees Retirement Association plan. We find sizable levels of deferred compensation that is associated with retirement age and period, job class, service years, and to some extent gender, with administrators receiving the highest levels. We also find wage–earning profiles to underestimate salary growth for higher-paid employees.

Gender, Race, and Meritocracy in Organizational Careers

This study helps to fill a significant gap in the literature on organizations and inequality by investigating the central role of merit-based reward systems in shaping gender and racial disparities in wages and promotions. The author develops and tests a set of propositions isolating processes of performance-reward bias, whereby women and minorities receive less compensation than white men with equal scores on performance evaluations. Using personnel data from a large service organization, the author empirically establishes the existence of this bias and shows that gender, race, and nationality differences continue to affect salary growth after performance ratings are taken into account, ceteris paribus. This finding demonstrates a critical challenge faced by the many contemporary employers who adopt merit-based practices and policies. Although these policies are often adopted in the hope of motivating employees and ensuring meritocracy, policies with limited transparency and accountability can actually increase ascriptive bias and reduce equity in the workplace.

Is the World Flat or Spiky? Information Intensity, Skills, and Global Service Disaggregation

Which service occupations are the most susceptible to global disaggregation? What are the factors and mechanisms that make service occupations amenable to global disaggregation? This research addresses these questions by building on previous work by Apte and Mason (1995) and Rai et al. (2006) that focuses on the unbundling of information and physical flows. We propose a theory of service disaggregation and argue that high information intensity makes an occupation more amenable to disaggregation because the activities in such occupations can be codified, standardized, and modularized. We empirically validate our theoretical model using data on more than 300 service occupations. We find that at the mean skill level, the information intensity of an occupation is positively associated with the disaggregation potential of that occupation, and the effect of information intensity on disaggregation potential is mediated by the modularizability of an occupation. We also find that skills moderate the effect of information intensity on service disaggregation. Furthermore, we study the patterns in U.S. employment and salary growth from 2000 to 2004. Contrary to popular perception, we do not find any adverse effect in terms of employment growth or salary growth for high information-intensity occupations at the mean skill level. Our findings show that high-skill occupations have experienced higher employment and salary growth than low-skill occupations at the mean level of information intensity. Notably, high information-intensity occupations that require higher skill levels have experienced higher employment growth, though this employment growth is accompanied by a decline in salary growth. Occupations with a higher need for physical presence have also experienced higher employment growth and lower salary growth. Overall, these results imply that firms and managers need to consider the modularizability of occupations as they reallocate global resources to pursue cost and innovation opportunities. For individual workers, our results highlight the importance of continuous investments in human capital and skill acquisition because high information-intensity and high-skill occupations appear to be relatively less vulnerable to global disaggregation.

The Accumulation of Human Capital Over Time and its Impact on Salary Growth in China

This study compares the growth in salaries across three spatial regions in China during the period 1993–1998, when economic reforms were implemented nationwide. Our study compares the impact of three forms of education and training on salary growth, namely pre‐job formal schooling, on‐the‐job‐training provided by employers, and adult education paid for by the employees themselves. We used a three‐level hierarchical linear model to partition variance among individual, firm, and regional characteristics. The data were drawn from a 1998 survey of 16 485 employees from 365 firms in six provinces (two provinces in the eastern part of the country, two in the central part, and two in the western part). We found that: (1) regional disparities have a paramount impact on differences in salary; (2) individual characteristics defined by firm as well as firm characteristics are significantly related to salary decisions; (3) returns to formal schooling increase significantly in more market‐based regions; and (4) employees also benefit by receiving on‐the‐job‐training and by participating in adult education programs outside their firm.

Gender differences in faculty pay and faculty salary compression

A recording distinction between cost-of-living and merit adjustments at a unionized, public liberal arts college allows us to examine several issues related to gender differences in faculty pay. For example, we find that annual fixed-dollar merit increases and similar starting salaries contribute to comparable salary growth rates for female and male faculty. In this setting, the male faculty earnings advantage is traced to higher rank and years of service. These results underscore the importance of gender-neutral salary-setting practices and equal access to promotion and retention for female faculty. The salary distinctions also allow us to determine the source of the seniority penalty. The economics literature is divided on whether the often-observed lower pay of senior faculty is deserved. We find that merit pay rises with additional years of seniority and that the seniority penalty is rooted in cost-of-living adjustments that fail to keep pace with market trends. These findings illustrate how the seniority penalty can be linked to budget considerations rather than the lower productivity of senior staff.

The effect of financial constraints and political pressure on the management of public pension plans

When government sponsors of public pension plans experience tight fiscal constraints, they manipulate the plans' actuarial assumptions to lower their required contribution. Examining the salary growth assumption, amortization period, and expected rate of return, we find evidence that entities facing financial constraints are more likely to have optimistic accounting assumptions than those which are not. Additionally, we find these plans have a greater propensity for underfunding than plans from less fiscally constrained states. Finally, the problem is further complicated by the political pressure placed on some pension plans. We find evidence that plans subject to political pressure are also more likely to have optimistic accounting assumptions and to be more underfunded than those plans not facing political pressure.

The effect of financial constraints and political pressure on the management of public pension plans

When government sponsors of public pension plans experience tight fiscal constraints, they manipulate the plans' actuarial assumptions to lower their required contribution. Examining the salary growth assumption, amortization period, and expected rate of return, we find evidence that entities facing financial constraints are more likely to have optimistic accounting assumptions than those which are not. Additionally, we find these plans have a greater propensity for underfunding than plans from less fiscally constrained states. Finally, the problem is further complicated by the political pressure placed on some pension plans. We find evidence that plans subject to political pressure are also more likely to have optimistic accounting assumptions and to be more underfunded than those plans not facing political pressure.

How to Improve the Supply of High-Quality Teachers

How to Improve the Supply of High-Quality Teachers

The Long-Term Costs of Career Interruptions

This article is based on a study that analyzed the long-term salary implications of career choices made by healthcare administrators. The study used a cohort of graduates from a single health administration program; these individuals had comparable levels of human capital at the outset of their careers. We estimated the effect of periods of part-time employment and job interruptions--voluntary and involuntary--on long-term salary progression. We also estimated the impact of other career choices, such as membership in a professional organization or the decision to relocate. After controlling for these choices, we estimated the residual effect of gender on salary. We found that voluntary interruptions had a greater effect on long-term salary growth than did involuntary interruptions of the same length or periods of part-time employment. Individuals evaluating options for balancing career and family constraints should understand the long-term cost of choosing a career interruption rather than part-time employment during periods of heightened responsibilities outside the workplace. Healthcare administrators should also be educated about the positive association between professional memberships and career advancement to make informed decisions about participation in such organizations. Surprisingly, after controlling for all choice variables, gender had no measurable effect on long-term salary growth. Half of those who indicated a voluntary interruption for dependent care reasons preferred part-time or flexible-hour work if it had been available. These results suggest that a pool of healthcare administrators might compete for positions if more part-time opportunities were available.

Baseball Competitiveness and the Free Agency Era

Major League Baseball owners have fired the first shot over the bow in their perpetual war with the players association concerning the financial health of the sport and the need for financial reforms that might slow down the growth of player salaries. The owners' salvo comes wrapped in a Blue Ribbon Commission Report that is clearly an owners' document, as the commissioner's office authorized the study and no labor representative was invited to be part of the commission. (1) For baseball fans fearing a repeat of the shutdown of the sport that occurred in 1994 and into the 1995 season, there is reason for both optimism and pessimism. The optimism rests with the fact that the owners have apparently recognized that the implementation of a salary cap is not a realistic possibility; the commission notably refrained from recommending such a cap as a solution to what it sees as the growing financial crisis affecting the sport, in recognition of the power and resilience of the players association in opposing such a c ap and in the belief that other remedies short of the cap can combat the financial inequities identified by the commission. The pessimistic side is that the commission, and many of the baseball owners, contend that there is a serious crisis of competitiveness in baseball that requires controversial reforms, including a luxury tax of 50 percent on all team payrolls exceeding $84 million. (2) The commission argues that such a tax--along with a series of other measures, including wider distribution of radio and TV revenue--is necessary to overcome the substantial disparities of revenue that make it increasingly difficult for all but a handful of teams to compete. The players association has stated publicly that it sees such a high luxury tax as representing a drag on players' salaries and therefore unacceptable as a concession in bargaining negotiations. (3) The rival positions of the owners and players have their roots in two separate but interrelated issues. First, each side reaches opposite conclusions regarding the financial health of the sport as measured by the financial stability and profitability of franchises. Second, the owners and players disagree about whether or not the sport faces a crisis of competitiveness that relegates all but the richest franchises to having no hope of competing for the playoffs. The commission uses financial data to bolster the owners' position that most franchises have been facing a serious financial crisis since the last work stoppage of 1994, even claiming that only three franchises have made money since that time. The players association, along with other critics of the Blue Ribbon. Report, counter that the commission exaggerates the financial losses by not including a variety of sources of revenue and tax deductions available to Major League teams, such as merchandising revenue, licensing agreements, and generous federal and state tax deductions, which allow a club to write off significant expenditures. (4) At this point, we simply don't have the data to confirm the reliability of the commission's claims of financial losses, but it's worth noting that business publications such as Financial Week and Forbes have used information available to reach conclusions very different from the Blue Ribbon Commission's. According to these publications, most Major League franchises have been making money, and the values of franchises have continued to rise across the board, as demonstrated by the escalating sale prices of Major League franchises. (5) FINANCIAL INEQUALITY AND COMPETITIVENESS The competitiveness issue is perhaps even more important to this debate because, if the owners are correct, only a narrow range of teams can hope to compete in today's financial environment, relegating most fans to having no hope that their teams can reach the postseason even before the season starts. Just how true are the commission's and owners' claims? …

Lies and Statistics

Professional sporting clubs will engage in an arms race so long as regulations allow them to do so. The Australian Football League shows salary caps can improve the competitiveness of professional sporting leagues. However, restraints are needed to slow unsustainable growth in both player salaries and football operations expenditure. [Text of column published in the Australian Financial Review, Saturday 28 August 2002, page 51]

Determinants of salary growth in Shenzhen, China: an analysis of formal education, on-the-job training, and adult education with a three-level model

Using 1996 surveyed data of 1023 employees in Shenzhen, China, this study estimated the effects of three forms of human capital on employee salary, namely formal education, on-the-job training provided by employers, and adult education pursued by employees. Using a hierarchical linear model, the analysis estimated employee monthly salary growth over a maximum of six years due to (a) such temporal factors as work experience and improved performance, (b) individual-level characteristics, and (c) firm-level characteristics. This study found that (a) pre-work formal education was positively associated with salary only at hiring, (b) employees' experience in changing production technology as well as on-the-job training were positively associated with salary increases through improved technical proficiency, formal education was not; (c) manufacturing firms introduced more new production technology than the service sector and provided more on-the-job training, thus improving workers' performance and increasing their salary.

WHAT DO PROACTIVE PEOPLE DO? A LONGITUDINAL MODEL LINKING PROACTIVE PERSONALITY AND CAREER SUCCESS

We developed and tested a model linking proactive personality and career success through a set of four behavioral and cognitive mediators. A 2‐year longitudinal design with data from a sample of 180 full‐time employees and their supervisors was used. Results from structural equation modeling showed that proactive personality measured at Time 1 was positively related to innovation, political knowledge, and career initiative, but not voice; all measured at Time 2. Innovation, political knowledge, and career initiative in turn had positive relationships with career progression (salary growth and the number of promotions during the previous 2 years) and career satisfaction. Interestingly, voice had a negative relationship with career progression. We discuss practical implications and future research directions for proactive personality, extra‐role behavior, and careers.

Pay for performance? Government regulation and the structure of compensation contracts

In 1992–1993, the SEC required enhanced disclosure on executive compensation and Congress enacted tax legislation limiting the deductibility of non-performance related compensation over one million dollars, i.e. Internal Revenue Code Section 162(m). We examine the effects of these regulatory changes and report small and large sample evidence that many million-dollar firms have reduced salaries in response to 162(m) and that salary growth rates have declined post-1993 for the firms most likely to be affected by the regulations. We further document that bonus and total compensation payouts are increasingly sensitive to stock returns after 1993, especially for firms with million-dollar pay packages. We also document that, once we control for other factors affecting CEO incentives, the sensitivity of the CEO's wealth to changes in shareholder wealth has increased from 1993 to 1996 for firms with CEOs near or above the million dollar compensation level. Overall, our results suggest that some firms have reduced salaries in response to 162(m). More importantly, the pay for performance sensitivity, measured using total annual compensation and firm-related CEO wealth, has increased for firms likely to be affected by 162(m).

Gender Differences in the Salaries and Salary Growth Rates of University Faculty: An Exploratory Study

Gender Differences in the Salaries and Salary Growth Rates of University Faculty: An Exploratory Study

Gender Differences in the Salaries and Salary Growth Rates of University Faculty: An Exploratory Study

This study uses individual growth modeling to examine gender differences in salaries and salary growth rates between 1985 and 1995 for a sample of 306 faculty members at a research university. We analyze gender differences in estimated annual salary in 1985, the start of the ten-year period of study, as well as differences in the rate of salary growth during subsequent years. Individual growth modeling is particularly well suited to an analysis of salary changes over time, since it has the advantage of making use of all available data points rather than only two, as is the case with traditional change models. Findings show that a sizable gap between men's and women's estimated 1985 salaries remains after controlling for relevant factors. However, women show higher rates of salary growth during the ten-year period. Faculty with the highest growth rates are those most likely to leave the university, and, as a result, the salary growth rates for women and men are virtually identical by the end of the ten-year period.

The Impending Crisis In Healthcare

The Impending Crisis In Healthcare