What this lesson teaches
I can explain the wage and non-wage factors behind a person's choice of job.
Syllabus K343, 3.3.1. Factors affecting an individual's choice of occupation: wage and non-wage factors
Make a guess
Siti is offered $4,500 a month at a start-up with long hours, or $3,900 in a secure job with regular hours. Which will she choose?
- The start-up, because people choose the job with the higher wage.
- It depends on how much she values security and time.
- The secure job, because security matters more than pay.
Show the answer
It depends on how much she values security and time.
Pay is only one factor. Non-wage factors such as hours, security and training can outweigh a higher wage.
People choose jobs by weighing the pay against non-wage factors such as hours, security and job satisfaction.
When people choose an occupation, pay matters. Wage factors include the basic wage, overtime pay, bonuses and commission.
Non-wage factors matter too. These include hours, holidays, job security, the chance of promotion, training, working conditions and distance from home. Fringe benefits, such as health insurance or a company phone, also count.
Job satisfaction is also important. Some people accept lower pay for work they find meaningful, such as nursing or teaching.
A worker weighs all of these together. A job with high pay but long hours and little security may lose out to a lower-paid job with good conditions.
- Wage factors
- Basic wage, overtime, bonuses, commission.
- Non-wage factors
- Hours, holidays, security, promotion, training, conditions, location, fringe benefits.
- Job satisfaction
- Enjoyment or meaning from the work itself.
Worked example: Comparing two job offers
Siti, a new graduate, has two offers.
- Job A: $4,500 a month at a start-up, long hours, uncertain future.
- Job B: $3,900 a month in the civil service, regular hours, strong job security and training.
- Wage factor: Job A pays $600 more each month.
- Non-wage factors: Job B offers security, training and time for family. Siti may choose B if she values these more than the extra pay.
Watch out for this
People always choose the job with the highest wage.
Pay is only one factor. Hours, security, promotion, location and job satisfaction can outweigh a higher wage.
Check your understanding
Two jobs pay exactly the same. Which difference would lead most people to pick job A?
- Job A offers training that leads to promotion
- Job A gives less security if sales fall
- Job A has longer hours and a longer commute
Show the answer
Job A offers training that leads to promotion
Right. With pay equal, non-wage factors such as career prospects decide the choice.
Check your understanding
Which of these is a non-wage factor in choosing a job?
- Overtime pay for extra hours
- The chances of promotion
- Commission earned on each sale
- A yearly bonus based on results
Show the answer
The chances of promotion
Right. Promotion prospects affect how attractive a job is without being part of today's pay.