Is a higher salary or a bonus enough to make employees happy? Which industries have the strongest correlation between happiness and wages? Don’t speculate - check the the results of a scientific research!
How Much Does the Salary Affect Employees’ Happiness?
Age old question: Does money bring happiness?
It’s an age-old question, does money bring happiness?
While we can all agree it does not buy love, friendship, luck or family, it is safe to say money can lead to purchases of items and experiences that do bring joy, even if momentarily.
Aristotle famously stated that virtue is the key to a well-lived life, but he was also not opposed to the idea that the ‘good life’ did require you to be rather affluent.
Nietzsche, while rather penniless himself, argued against the gospels approach of money being ‘evil’. As the writers of these gospels did not possess money or power themselves and therefore weakness and poverty must be seen as good, he saw this as a ‘sour grapes’ view on the matter and stated we should be wary of the ‘poor man’ who sees money as evil.
Karl Marx took a completely different view on wealth and happiness and declared riches do not make one individual happy, rather it can change the world in other ways, it gives the ability to accomplish great things, drives history but also consumes too much of our time.
Correlation of salary and happiness: The latest research
While those of us who long for a bit more prosperity may take solace in the thought that money does not create our own happiness and it is determined by our actions, attitudes and those you surround yourself with, The CPD Standards Office collated data from The ONS to find out if there is a correlation between wealth and happiness.
While we are still learning from philosophers, even thousands of years after their passing, we can agree their words are often something to be lived by. However, it is 2020 and modern life is incredibly different from the times of their writing and different conclusions can now be made.
Modern life has created modern careers, along with new-age expenditures such as cars, Wi-Fi and mortgages and attitudes are changing towards our finances, or lack thereof. Many of us seek higher salaries as we believe it will ease the pressure of present-day life and therefore lead to greater contentment overall.
The CPD Standards Office cross-matched data collected from The ONS to understand if there truly is a correlation between income and happiness across industries. The results are discussed below.
Correlation between average weekly salary and happiness
Respondents were queried on their level of happiness, with 0 being completely unhappy and 10 being completely happy.
The industries that scored on top with a correlation between average weekly earnings and happiness were:
Retail, Trade and Repairs - 92.01%
Accommodation and Food Service Activities - 88.91%
Education - 88.59%
Administrative and Support Service Activities - 87.4%
Manufacturing - Engineering and Allied Industries - 86.3%.
As these industries showed such a strong correlation, it shows that as earnings increase, so does happiness.
The industries that reported the lowest correlation are as follows:
Mining and Quarrying - 22.15%
Professional, Scientific & Technical Activities - 26.18%
Manufacturing - Chemicals and Man-made Fibres - 33.22%
Real Estate Activities - 33.68%
Financial & Insurance Activities - 34.30%
Exact data as to why these answers were provided was not given, however, we can certainly speculate on this outcome. Professions such as mining and quarrying are demanding and highly stressful careers.
These industries will often compensate for this by offering decent salaries, but this does not necessarily mean that happiness levels will increase in the environment as the physical and mental strain of these roles will remain at the same level, despite offering a higher weekly earning. Health is impacted highly in these careers and is something that simply cannot be repaid with the benefit of more wealth.
The implication that those who correlated highly with average weekly salary and happiness levels are not in stressful roles is not correct, rather, any unhappiness can be reduced with the benefit of a higher wage
Administrative, skill and trade-based roles saw the highest overall correlation between happiness and average weekly salary.
The correlation between anxiety and average weekly earnings
Anxiety was scored in a similar fashion to happiness, with 0 possessing no anxiety and 10 representing highly anxious when respondents were queried on how anxious they are feeling.
The industries that scored the highest correlation between average weekly earnings and anxiety were as follows:
Retail, Trade and Repairs - 74.52%
Manufacturing-Other - 72.07%
Manufacturing - Engineering and Allied Industries - 70.67%
Education - 68.51%
Accommodation and Food Service Activities - 68.04%
These correlations are not as strong as the 80%+ between happiness and average weekly earnings, however, these results are still notable.
We have already discovered that retail, trade and repairs have the strongest correlation between happiness and their wages, but these industries also have the highest correlation with anxiety levels.
Anxiety can be mistaken for unhappiness, but they are two different emotions and we can possess happiness alongside anxiety. We can presume from these results that as pay increases, so does job responsibility which can create more anxiety for an employee.
Surprisingly, health and social work, an industry infamous for high stress and anxiety levels, scored the lowest correlation at just 53.40%. However, anxiety does not appear to increase in line with rising wages.
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Employees satisfied with income are more anxious?
Income satisfaction was also scored to reflect how happy a respondent was with their earnings; this was broken down into the following categories:
Neither satisfied nor dissatisfied
Respondents were also asked to answer how they were managing financially, and this was scored as follows:
Just about getting by
Finding it quite difficult
Finding it very difficult.
Those who responded as ‘completely satisfied’ with their income reported a 65.68% correlation with higher anxiety levels.
There was also a correlation between anxiety and ‘living comfortably’ at a high rate of 89.97%.
Those who are earning higher incomes are most often in roles with more responsibility and higher stress levels which can, therefore, lead to heightened anxiety levels.
We can conclude that for 65-80% of those who are living comfortably or completely satisfied with their income will have higher anxiety levels, but it still important to remember this doesn’t always have an impact on happiness.
Bonuses and happiness correlations
Throughout many industries, bonuses are offered to employees, this can boost productivity and staff morale. However, the study shows these bonuses may not be providing increasing happiness to employees.
Respondents were asked if bonuses contributed to their happiness, the correlation percentage was small and relatively inconclusive. This industry that showed the highest correlation was construction, but this was a weak 41%.
We could decipher this in a few ways, it could be proof that bonus amounts are not high enough to justify a change in attitude or perhaps income satisfaction is already high that receiving extra income would not affect happiness levels.
When it comes to performance-based bonuses, employees can be placed under increasing pressure to meet targets to achieve this. As stress increases, the bonus can seem redundant, the outcome may not justify the means.
Happiness and income satisfaction
You may mistake industries who reported a correlation between happiness and higher weekly earning would also report a higher correlation with happiness and income satisfaction.
Income satisfaction does not always mean earnings are higher. Employees on a more modest income can still report high levels of income satisfaction alongside happiness.
The highest correlation between income satisfaction and happiness were within the following industries:
Retail, Trade and Repairs - 87.81%
Administrative and Support Service Activities - 87.74%
Education - 85.71%
Accommodation and Food Service Activities - 84.87%
Health and Social Work - 81.98%.
The lowest correlation between income satisfaction and happiness are within the following industries:
Mining and Quarrying - 9.28%
Professional, Scientific and Technical Activities - 24.15%
Manufacturing - Chemicals and Man-made Fibres - 29.18%
Financial and Insurance Activities - 29.46%
Real Estate Activities - 29.95%
For mining and quarrying, change to income has very little correlation with happiness, likely due to the poorer working conditions that other industries do not have to face. Despite rising incomes, the impact on workers’ health remains the same.
Retail, trade and repairs revealed to have the highest correlation between income satisfaction and average weekly earnings, alongside happiness and income satisfaction but also reported the highest levels of anxiety.
Key takeaway: Does money equal happiness?
Overall, we can see that money can equal happiness, but it is all dependent on your job role and it is also highly likely you will have to sacrifice your mental health in order to achieve this.
You are most likely to be able to achieve happiness through earnings in retail, trade and repair based roles. However, if you work in a more manual based role like mining and quarrying, you are unlikely to be able to obtain happiness through earnings.
It is important to remember that these rules do not apply to everyone, each human is different and what brings them happiness or anxiety can vary between one person to the next.
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About the author
Amanda Rosewarne has a background in occupational psychology, extensive experience in the CPD field, and is a unique expert on the provision of workplace training and CPD learning.
As CEO and Co-Founder of the CPD Standards Office, she advises a multitude of organisations, from professional bodies to corporate employers, to small training providers on ‘becoming CPD ready’ and implementing CPD best practice within their organisations.