Workers misjudge their salary compared to others - completely

Interestingly, there are probably a few standard economic models according to which employees are well aware of what their earning potential would look like if they moved to another company or even to another industry.

A research group from MIT, the University of California, Berkeley and the University of Cologne has put this notion to the test with a comprehensive survey and hard numbers. Even though this is a study relating to the German labor market, the results should also be transferable to other countries, according to the authors.

The average perception was that people earn 10 percent more in other sectors, regardless of the sector they are moving from. However, the actual salary increase when switching was only 1 percent.

It was also shown that this misconception is not widespread among low earners. They assume that they would expect a lower salary in a different sector. And the respective misconception basically has a consistent effect on the real salary.

The coronavirus pandemic has demonstrated this in practice to some extent: Many people with below-average incomes were able to experience first-hand that they had better earning opportunities outside the restaurant business, for example. However, many were not aware of this until they were forced to change jobs.

People with average earnings who believe in higher salaries in other sectors are more likely to leave their own company. If, on the other hand, they receive information about the conditions in comparable jobs, they change their job search requirements or decide to have salary discussions at their current company.

Thus, misconceptions about the salaries of others not only lead to dissatisfaction in one's own job. Especially in the low-wage sector, the pessimistic view of their own earning potential prevents them from improving their situation by changing jobs or negotiating, according to the authors of the study.