Businesses seeking highly educated talent would do well to appeal to college graduates’ desire to “change the world.” And in doing so, they might change the world a little, too—by offering jobs that come with the unintended effect of reducing income inequality.
Many ambitious college graduates are looking for meaning in their work—and are eager for roles offering a higher purpose even if they pay less than traditional positions. When graduates are willing to work for less in jobs they feel are “useful to society,” the labor market becomes more equitable, new research shows. That’s because jobs that require a college degree pay roughly two-thirds more than jobs that don’t, a number that has doubled over the past 40 years, according to recent research coauthored by Letian (LT) Zhang, an assistant professor at Harvard Business School.
Such “prosocial” jobs—think roles that build organizational purpose or social responsibility—reduce the overall bump paid to college-educated workers by about 5 percent, finds the study, which Zhang wrote with Nathan Wilmers, an associate professor at the Massachusetts Institute of Technology Sloan School of Management.
“There’s a big debate across almost every society on how much we should allow the private sector to handle prosocial objectives,” says Zhang, who studies workplace culture and social inequality. “What we saw here is that if the private sector engages in that prosocial mission, you actually have this unintended consequence of potentially lowering wage inequality in the labor markets.”
The findings come at a time that communities expect more from companies and HR departments wrestle with the vexing combination of economic concerns and labor shortages. While the authors don’t speculate on why companies would advertise roles as having social impact, they acknowledge that not all college graduates can afford to accept a lower salary. However, those willing to sacrifice some pay to potentially “make a difference” can also move the needle on income inequality.
“This college premium has been a big source of inequality and rising inequality over the past 40 years. So, in that sense, there’s a little bit of good news in our paper from an inequality perspective,” says Wilmers, who focuses on wage and earnings inequality. “It’s not that this is a conscious thing that employers are doing, yet it has this interesting side effect.”
Social good—and its unintended consequence
The authors set out to test two ideas. Do jobs aiming for social good that require a college degree pay less than similar traditional jobs? And, if so, does that result in narrowing income inequality as a whole?
To identify altruistic job postings from a broader pool, researchers used machine learning, and turned to data firm Burning Glass Technologies, which sifts through tens of thousands of online job boards and company websites.
The authors examined some 15 million job postings from 2007 and from between 2010 and 2019. To parse terms that imply the potential for social impact, the authors hand-coded 500 postings to yield 100 key phrases including “making a difference,” “giving back,” “positively impact,” “improving the lives,” and “people’s lives.”
Listings included a wide range of employers from companies to nonprofits and government agencies, and compared prosocial and standard job postings with the same skill requirements—some 27,000 of them.
To test the veracity of their work, the authors cross-referenced employee reviews from the website Glassdoor. They also examined the salaries earned in major US cities, ensuring that they are comparable across regions.
Social impact jobs are ‘luxury goods’
If an employer seeking college-educated employees highlights the potential to improve society—and the job includes work toward those goals—they can attract strong candidates at a slightly lower cost, the research finds. Such altruistic jobs become a “luxury good” whose value in doing good makes giving up some compensation a worthwhile trade for some workers who could earn more in a traditional position, the authors write.
The shift may eventually broaden traditional labor market analysis, which tends to focus solely on wages and other traditional perks, Zhang says.
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