A new study says knowledge is money: If workers knew how much they could make elsewhere, even more would quit their jobs — and low-wage roles would be forced to pay more
If low-wage workers knew how much they could make elsewhere, a whole lot of jobs would be unsustainable — because the workers would just quit.from economists at MIT, the University of Cologne, the London School of Economics, and the University of California, Berkeley. They set out to test a long-held economic assumption: That workers know what they could be making somewhere else, and know what similar jobs pay. But that doesn't seem to quite be the case in the real world.
The researchers surveyed 516 part-time and full-time German workers in 2019 and 2020. The result: Workers, particularly low-wage or underpaid ones, think that wages elsewhere are much closer to what they currently make than they actually are. In Germany, 10 to 17% of low-wage jobs wouldn't be viable at their current pay if workers accurately understood how much they could make elsewhere, the study concluded. The findings shed light on the current US labor situation, where the post-vaccine economy sees hiring booming — and anecdotal reports of labor shortages and quitting abound.
"Workers would quit or ask for large raises if workers did have accurate perceptions or information about wages with other employers," Benjamin Schoefer, an economist at UC Berkeley and one of the paper's authors, told Insider.A near-record number of Americans have been quitting their jobs for