I recently attended a lecture featuring a Christian leader who oversees an international network of pastors and missionaries. The speaker drew a sharp distinction between “conventional compensation” practices (such as salaries and benefits), and what he referred to as “holy incentives.” In his view, holy rewards—mostly intrinsic and nonmaterial in nature—function as a purer and more honourable mechanism for guiding church-related work than do traditional rewards, which can both distract and debase those serving in vocational ministry. Having worked in both church and marketplace settings, I found myself bristling during this part of his lecture. His comments seemed to malign the legitimate need of people engaged in church-related work for material wages (see Luke 8:3; 10:7; 1 Corinthians 9:14). Conversely, his questioning the legitimacy of traditional rewards seemed to devalue work in marketplace contexts, and implied (though I recognize that I’m hypersensitive in this area) that non-church labour seeks to serve “mammon” more than to please God.
Shaping a Theology of Pay
As people of faith, we don’t always work with perfect motives, yet we trust that our labour is not in vain. We desire to make a difference, and we enjoy being a part of purposeful, honourable work. We also like to be recognized for our efforts, and our pay serves as one measure by which our employers value the contributions we make. It has been said, in the work world, that compensation is the language of valuing.
I hope to dispel some taboos related to compensation, while offering a theologically informed framework for navigating expectations and pay-related decisions. My intention is to offer practical guidance for those of us who work for pay. When it comes to compensation, how should we, as employees and as employers, respond, inwardly and outwardly? What does a faithful “pay posture” look like? What constitutes fairness? What should we do if we feel that we are paid too little or, in rarer circumstances, paid too much? And what are some of the spiritual challenges associated with monetary rewards?
Compensation is a complex and personal topic that evokes deep emotions and is highly consequential in shaping actions. According to behavioural research (as opposed to employee self-reports) on pay, the wages we earn serve as the primary motivator for what we do on the job. However, there’s no one-size-fits-all strategy, as pay appears to be evaluated differently by diverse types of people. For example, research by Stewart (1996) published in the Journal of Applied Psychology, showed that pay more directly influenced performance outcomes for extroverts than for introverts.
Although pay is highly influential, I do not believe that it is the only reason we work, nor is it our only reward from work. Many other components make up our total compensation packages (including vacation policies, healthcare benefits, and continuing-education opportunities). In addition, formal payment policies don’t include the array of intrinsic benefits we gain from working (such as satisfaction from a job well done and the opportunity to work with stimulating colleagues on important projects).
For the sake of narrowing a very broad topic, I’ll focus my comments on the salaried or wage-earning middle, rather than the high-paid executive or the low-wage employee who is struggling to make ends meet. I don’t discount the important concerns at either end of the pay scale, but those issues deserve more consideration than can be offered here. However, I do want to briefly identify a few ethical concerns at the ends of the pay continuum, as they help frame principles for thinking biblically about compensation for those in the middle.
On One Hand: Are Trends in Executive Compensation Moving in the Right Direction?
For nearly forty years, the rate of executive compensation has increased dramatically, inviting sharp criticism from the public. The complaints have fallen into two broad categories: First, executive compensation has increased exponentially and unfairly relative to the average employee’s pay, which (in real terms, considering inflation) has remained flat; and, second, executive compensation, especially the incentive piece of the pay equation, is often inadequately tied to actual company performance. Both points are valid, but the runaway executive-to-employee pay ratio may be the most troubling because it seems to subvert a biblical notion of justice. According to the Economic Policy Institute, CEOs in 2011 earned 231 times the salary of an average worker as compared to twenty times the salary in 1965 (factoring in the value of stock options exercised by executives in a particular year). The AFL-CIO believes the CEO-worker ratio in 2011 is more like 380 times average pay. Are these dramatic disparities justifiable? And are they conducive to the types of businesses needed to meet the societal challenges we face?
On the Other Hand: Is Enough Attention Paid to Living Wages?
Clearly, companies devote a lot of attention to compensating high-level employees, but this isn’t necessarily true with respect to low-wage employees, who are often viewed as more expendable and peripheral to a company’s overarching mission (but see Matthew 25:40 regarding “the least of these”). I recognize the difficulty of establishing a threshold of fair pay, given the rapid shifts of social, economic, and geo-political forces in the world, and the strong inducements to outsource and offshore labour. Nonetheless, establishing just compensation systems clearly demonstrates an employer’s willingness (or lack thereof) to honour and maintain human dignity. An inattention to fair, livable wages for employees weakens the potential for wellbeing in the world.
In the Middle: Compensation and “Right Relationship”
Given the growing disparity between executive and average worker pay, as well as widespread inattention to livable wages, what principles of fairness should guide Christians in thinking about wage-related matters? Can blind spots at the ends of the pay continuum help direct faithful real-world salary decisions for those of us in the middle? Michael Naughton’s excellent article, “A Theology of Fair Pay,” offers three principles for shaping a thoughtful response. He differentiates between need, order, and contribution in determining a “right relationship” between employers and employees with respect to pay.
First Question: What Do I Need?
The living wage conversation emphasizes the moral obligation of an organization to meet the basic needs of its employees. What’s not often explored is the other side of the need discussion, whereby an employee evaluates his or her salary through the lens of both personal needs and obligations to others. This is a fruitful exercise, especially for workers who enjoy pay above subsistence levels. Conducting such an analysis can help calibrate baseline pay expectations. Remember that scripture affirms paid work as vital for supporting oneself and one’s family members (see 1 Thessalonians 2:9, 4:11-12; 2 Thessalonians 3:7-13), as well as for those beyond our inner circles who need our support (see Acts 20:35; Ephesians 4:28). When assessing our financial needs, it might be appropriate to ratchet up our earnings expectations. Or we might discover that we have fewer needs that we thought, which frees us to think differently about salary.
Interestingly, Catholic social teaching connects pay with family size and need, asserting that wages should allow families to save and acquire some personal property to protect long-term freedom and interests. In addition, ideal pay policies should provide a subsidy for dependent family members and remuneration for domestic work performed by a parent who forgoes paid work in the marketplace. These benefits should not necessarily be legislated, but it makes moral sense that employees (and employers) consider these issues when setting compensation. Our tax code makes some financial provisions for the needs of families; maybe it’s time that our pay policies do, too.
Those of us whose salaries enable us to meet our needs and satisfy many of our wants face corresponding spiritual challenges. Affluence can divert our attention from that which is most important—trusting in the care and provision of God. For some practical help in objective self-evaluation, visit the “How Rich Are You?” interactive survey at the Giving What You Can website, where your income and the size of your household provide a snapshot of how materially wealthy you are in comparison to the rest of the world. A spiritual discipline for setting pay expectations is to pray for God’s provision of just enough. Proverbs 30:8 is a good place to start:
Keep falsehood and lies far from me; give me neither poverty nor riches, but give me only my daily bread. Otherwise, I may have too much and disown you and say, “Who is the LORD?” Or I may become poor and steal, and so dishonour the name of my God.
John Locke, a seventeenth century English philosopher and physician, captures this proverb in a refreshingly simple analogy: “Our incomes are like our shoes; if too small, they gall and pinch us. But if too large, they cause us to stumble and to trip.”
Second Question: What Is Sustainable to My Employer?
As Naughton suggests, the principle of economic order highlights the sustainability question. Pay is a cost to the employer, and therefore, must be managed for the long-term health and viability of the organization. Employees (or job seekers) may need to adjust their salary expectations based on industry and organizational factors. Asking the sustainability question early can help to ensure that the employment one chooses has the capacity to meet baseline pay expectations. For example, joining a start-up, where fixed labour costs (such as salaries) are often tightly controlled, may mean less freedom for wide-ranging salary negotiations, but significant opportunity to discuss other forms of compensation, such as stock options or incentive pay based on net profits.
Last Question: What is Equitable?
Finally, the concept of contribution adds depth to the salary conversation by introducing the important principle of equity. According to Naughton, a living wage serves as a floor for what’s fair, but an equitable wage captures what’s just and right given an employee’s unique contribution to the organization’s mission. Compensation professionals understand this concept well, and recognize both the internal and external dimensions of equity. From an internal perspective, pay structures should fairly reflect the scale and scope of a particular job relative to other jobs. Jobs requiring more skill and responsibility typically command a higher salary than less demanding jobs, and employees who perform better or contribute more within the same type (or class) of job are often rewarded with higher pay than those who don’t perform as well. From an external equity perspective, compensation professionals benchmark pay against the market to ensure fairness in accordance with an organization’s articulated pay strategy. Some firms seek to be at the top of the market and others in the middle; thus, external equity can fluctuate based on a company’s pay strategy in relation to the broader marketplace.
From an employee perspective, being rewarded for our contributions is illustrated in the parable of the ten minas (see Luke 19:11-26). Workers are recognized for their stewardship in a manner commensurate with their output or the return they generate. We can think about our personal investment on behalf of our employers in a similar manner. As we use our capabilities to contribute more significantly to our employer’s overarching objectives, our pay should follow suit. According to a recent report commissioned by the Church Investors Group, entitled The Ethics of Executive Remuneration, authors Higginson and Clough note an interesting example of proportionality, as depicted in 1 Timothy 5:17. The meaning of this verse has been debated, but it’s probable that the “double honour” to be bestowed upon elders performing their work well includes some level of financial reward (note that verse 18 echoes a common scriptural refrain that a labourer deserves his or her wages).
If equity serves as a key principle for how we, as employees, seek to be rewarded, then we ought to be willing to turn around the fairness question for the benefit of our employer: Am I currently performing at a level consistent with my pay? We typically think of pay in only upward-moving terms, which can invite a spirit of entitlement. Salaries are a visible representation of an employer-employee contract, and need to be honoured by both parties. As employees, we face daily temptations of distraction and dissatisfaction, which may cause us to underperform. For example, during the recent London Olympics, so many Los Angeles city employees were streaming events at work that operations were affected and network meltdowns became a likely scenario.
Greater Transparency Will Help Us All
An African proverb states, “It is no shame to work for money.” There is nothing inherently good about poverty, nor is there anything inherently evil about material wealth. A central task for people of faith is to trust God to meet our needs and to share generously what has been entrusted to us (see Romans 12:13; 1 Timothy 6:18; 2 Coronthians 9:7). Salaries are a basic component of life and work, and should be approached openly and honestly under the rubric of need, sustainability, and contribution. In a recent Guardian article entitled, “Because You’re Worth It,” the author quips, “Sex and death haven’t really been taboo for decades—there are people who won’t stop talking about them—but I’ve never been at a party or at drinks in a pub where salaries were openly compared.” National Public Radio’s Marketplace ran a recent story, “How Much You Earn—the Last Taboo?” in which it surveyed people at different incomes levels about their openness to discuss pay with family, friends, and co-workers. It turns out those making between $15-50k are the most willing to talk, and those making over $200 thousand the most tight-lipped.
I’m not suggesting that our pay levels become a regular topic of conversation in social contexts, but I do believe greater transparency would go a long way toward dispelling fears and resentments with respect to what we are paid. Open discussions in the Christian community could also prompt greater thoughtfulness about our salary expectations, as well as better understanding of our unique contribution as community members within the settings in which we choose to work.
Contrary to the church leader’s stern admonition about the dangers of traditional reward systems, there’s nothing inherently evil about pay. Our salaries provide the necessary means to enjoy and steward God’s good creation, as well as to care for others. The dangers lie in the way we worry about and jostle for pay without clear benchmarks for need, fairness (which includes market competitiveness), and sustainability concerns for the organizations we serve.