Social Benefits in the Age of Uber
When it comes to wages and benefits, the company you work for often matters more than how good you are at what you do. That is neither fair nor economically beneficial: two people with equal capabilities should not be treated differently just because one happens to have a secure job in a big, successful company.
PARIS – When it comes to compensation, the company you work for often matters more than how good you are at what you do. In 2013, the average employee of Goldman Sachs, the investment bank, earned $383,000 – much higher than what the best-performing employee in most firms can hope to take home.
Pay differences across companies are considerable. Research by Jason Furman, US President Barack Obama’s top economic adviser, and Peter Orszag, Obama’s former budget director, has found that rising pay differentials are the prime cause of widening US wage inequality in recent decades. They account for a larger part of the rise in overall income inequality than wage differences within companies or capital income.
At the other end of the spectrum, many labor-force participants are on temporary contracts, work for small firms, or are self-employed. Some combine different jobs at the same time. If, as expected by many, the so-called sharing economy develops, their number is bound to grow. These workers do not benefit from job security and generally earn much less.