How compensation affects employment decisions:
One example that comes to mind has to do with my younger sister, Allison. Back in high school, she worked for several months as a sandwich artist at the Subway in our hometown, where she was making a little over minimum wage. However, after a number of months, they began cutting her hours, causing the checks she received to be a lot less than before. Despite discussing this with her manager and asking that her hours be restored to normal, she was not able to get scheduled for the same number of hours as before. Frustrated by the reduced amount of money she was making at this job, Allison quit her job at Subway and found a new job in the food service industry.
In this case, compensation was certainly a motivating factor in Allison’s decision. Although her commute to Subway was significantly shorter than her commute to her new job, she decided to trade her job at Subway for her new job because of the opportunity to work more hours and make more money. As a high schooler, she wanted money to spend on things like clothes, coffee, and going to the movies. Her basic living needs, like money for food, water, and shelter, were already met and not relevant to her decision. Here, she likely felt that if she continued working at Subway, she would not have enough money to buy all the things she wanted and would feel restricted in her budget. On the budget she would have working at Subway, she would only be able to go to the movies or the mall every once in a while, for example. In contrast, if she started working at her new job, she would be able to make a lot more money and buy more of the things she wanted, improving her quality of life. Rationally, she traded a job with a limited earnings potential for one with a higher earnings potential, allowing Allison to have more money to spend in ways that maximize her personal utility.