Monday, November 03, 2008

In praise of income inequality

Years ago, I saw an article describing a class of workers who were perfectly content to "remain in the trenches".  They didn't want the additional responsibility of a promotion, and were willing to forgo the additional salary.  Now I see this hint that it may be more far-reaching.

Michael Greenspan offers this on why income inequality is a good thing:

Because it encourages hard work. This is from an article about young Japanese who choose not to rise in their professions:

[G]etting a promotion no longer means getting such a big pay raise. The wage difference between managerial and rank-and-file positions has shrunk over the past decade as companies cut compensation amid restructuring. In 2005, division managers were paid about 2.2 times the rank-and-file worker, down from about 2.7 times in 1985.

No surprise if Japanese companies have trouble filling higher-level posts.

And indeed, higher-level jobs entail more work and more responsibility.  Why take on lots more responsibility unless you get lots more pay?

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