Wage considers performance, qualification, and type of work

Catholic social teaching emphasizes that the methods used to determine a wage are just as important as the compensation itself when evaluating a wage’s fairness and equity. In practice, this suggests pay determinations rooted in transparency, standardization, acknowledgement of a worker’s contributions, AND the worker’s inherent human value and rights. As Pope John XXIII notes in Mater et Magistra (1961), “the remuneration of work is not something that can be left to the laws of the marketplace; nor should it be a decision left to the will of the more powerful.”  Moreover, a just wage framework must consider “the effective contribution which each individual makes to the economic effort.”

KEY CST PASSAGES

“We therefore consider it Our duty to reaffirm that the remuneration of work is not something that can be left to the laws of the marketplace; nor should it be a decision left to the will of the more powerful. It must be determined in accordance with justice and equity; which means that workers must be paid a wage which allows them to live a truly human life and to fulfill their family obligations in a worthy manner. Other factors too enter into the assessment of a just wage: namely, the effective contribution which each individual makes to the economic effort, the financial state of the company for which he works, the requirements of the general good of the particular country — having regard especially to the repercussions on the overall employment of the working force in the country as a whole — and finally the requirements of the common good of the universal family of nations of every kind, both large and small.”
— Pope John XXIII, Mater et Magistra (Christianity and Social Progress), 1961 (71)

“The opportunity, moreover, should be granted to workers to unfold their own abilities and personality through the performance of their work. Applying their time and strength to their employment with a due sense of responsibility, they should also all enjoy sufficient rest and leisure to cultivate their familial, cultural, social and religious life. They should also have the opportunity freely to develop the energies and potentialities which perhaps they cannot bring to much fruition in their professional work.”
— Pope Paul XI, Gaudium et Spes (Joy and Hope), 1965 (67)

Wage considers performance, qualification, and type of work

Promising research by a team of business scholars led by Elena Belogolovsky finds that increasing transparency in pay—and the methods used to determine that pay—can have a positive impact on worker satisfaction, collaboration, and productive contributions to firms.

In a review of studies on the subject, management researcher David Burkus concludes that “not only does pay secrecy put a damper on individual performance, but…revealing pay information can actually increase performance, especially among top performers.”

Other scholars counter that transparency efforts must proceed with caution, noting that openness on wages may cause demoralization among those that believe their pay compared to others is undeservedly low, especially in cases where performance is not easily measured. As business professor Todd Zenger argues, employers may need to “convinc[e] employees that their necessarily imperfect measures are acceptably fair.”

Wage considers performance, qualification, and type of work

With the exception of the federal minimum wage and related state statutes (which vary greatly by jurisdiction), US laws do not generally impose specific procedures for determining wages on private sector employers. For government workers, however, civil service guidelines establishing “merit system principles” have led to wage scales with criteria for hiring, compensation, performance review, and promotion.

While these standard methods for evaluation and pay are not in force in the private sector, the procedures that employers do follow — including official job descriptions and performance evaluation practices — are important in other legal contexts. Job descriptions, for instance, are key factors for determining if an employee has protected rights concerning overtime pay, disability accommodations, protection from discrimination, and medical leave. Employment contracts featuring job descriptions strengthen these rights, often by prohibiting employers from initiating significant changes to a worker’s duties. Similarly, performance evaluations may be relevant to disputes over hiring and firing decisions, providing evidence to support an employer’s or employee’s claims in court. Moreover, some states such as California require that employers share evaluation records with employees upon request.

An additional area of law that applies to employers’ methods for determining wages are requirements for pay transparency. Many of these requirements are state-level protections for employees — and bans on employer penalties — if a worker inquires about or discusses pay structures within their organization. Notably, many of these requirements have an explicit purpose of increasing pay transparency to promote gender parity in pay.

Beyond state or federal law, some companies take action on their own to establish standard methods for determining compensation. The 2010 Culpepper Salary Range Structure Practices Survey found that 72 percent of North American companies had formal salary range structures. In designing these structures, nearly all of the companies used survey data about compensation for similar roles. While this high frequency of formal structures is encouraging, it is worth noting that implementation varied greatly between companies.

Wage considers performance, qualification, and type of work

Collective bargaining agreements between employers and unions — representing autoworkers, flight attendants, teachers, or any other group of employees — often provide detailed job descriptions linked to pay scales rooted in education, experience, and expertise levels. Provisions like these are designed to curb employer favoritism while rewarding employee loyalty and longevity, but it’s important to note that not all workers are eligible for union representation, which varies widely by job category and sector.

Some employers practice pay transparency in order to cultivate cultures of trust among their workers. Whole Foods, for example, makes compensation data available to all employees, while technology firms like Buffer practice complete pay transparency by making their wage scale public. Meanwhile, Glassdoor and PayScale contribute to transparency efforts by allowing employees to share salaries anonymously, which website visitors can then use to help determine the competitive pay rate for a job.