You’re Paid What You’re Worth: And Other Myths of the Modern Economy

by Jake Rosenfeld

“This is the book to throw at your human resources director―not literally, of course―when any attempt is being made to bamboozle you about how decisions on pay have been made…It is a closely argued, thoroughly researched treatise on how we got here and how pay could be both fairer and more effective as a reward.”
―Stefan Stern, Financial World

“A flat-out revelation of a book by one of the nation’s top scholars of the labor market…required reading for anyone who cares about the future of work in America.”
―Matthew Desmond, author of Poverty, by America

“Jake Rosenfeld pulls back the curtain on the multifaceted cultural, institutional, and market forces at play in wage-setting. This timely book illuminates the power dynamics and often arbitrary forces that have contributed to the egregious inequality in the U.S. labor market―and then lays out a clear blueprint for progressive change.”
―Thea Lee, President of the Economic Policy Institute

Job performance and where you work play a role in determining pay, but judgments of productivity and value are highly subjective. What makes a lawyer more valuable than a teacher? How do you measure the output of a police officer, a professor, or a reporter? Why, in the past few decades, did CEOs suddenly become hundreds of times more valuable than their employees? The answers lie not in objective criteria but in battles over interests and ideals.

Four dynamics are power, inertia, mimicry, and demands for equity. Power struggles legitimize pay for particular jobs, and organizational inertia makes that pay seem natural. Mimicry encourages employers to do what their peers are doing. And workers are on the lookout for practices that seem unfair. Jake Rosenfeld shows us how these dynamics play out in real-world settings, drawing on cutting-edge economics and original survey data, with an eye for compelling stories and revealing details.

You’re Paid What You’re Worth gets to the heart of that most basic of social Who gets what and why?

Genres: Economics, Nonfiction, Business, Politics, United States, Labor

384 pages, Paperback

First published February 16, 2021

Reviews

[Russ · Rating 5 out of 5]

A very important book. As a laborer, independent contractor, low paid cross country truck driver, Med tech and every other title that could be included in the underpaid essential category, reading this just reiterated what I've personally seen for decades. If we could get some upper management, CEO's, CFO's and Human Resources people to consider this essential reading in order to do their non essential jobs, that would be amazing.

[Jason Woodson · Rating 5 out of 5]

Really enjoyed this read. This book takes a deep dive into wage setting standards in America and the factors that have caused the income inequality gap to increase so much from the 1970’s until now (the disappearance of labor unions, increased barriers to entry, automation, etc.) and the steps we need to take in order to correct these market inefficiencies so people have the opportunity to earn a living wage in any profession.

[Brendan Monroe · Rating 5 out of 5]

Required reading for every American!

Gosh, it feels like I'm saying that a lot lately ... that people in this country ought to read this or that book.

Like Poverty, by America, "You're Paid What You're Worth" dives into the realities of modern-day capitalism, or, as Yanis Varoufakis dubs it in his book Technofeudalism: What Killed Capitalism, technofeudalism.

There are so many "myths of the modern economy" that ring false the moment you hear them, and yet many of these myths have been turned into tinny little aphorisms that we ourselves end up repeating. I could spend all day quoting all this "pull yourself up by your bootstraps," "self-made man" type garbage, but the one that's on my mind now, because I feel like I've been hearing it especially often lately, is that something "is above my pay grade."

Above your pay grade? Maybe that used to mean something, in a world where financial compensation actually stemmed from merit, but these days? Many (most?) of the world's billionaires gained their wealth not by inventing something the rest of us benefit from, but by having the good fortune to have been the selected seed in their father's ejaculate.

Maybe that's too harsh. Some of them actually did generate their wealth in their lifetimes, though not on their own, but thanks to a political and economic system that's been rejiggered to benefit them exclusively.

Jake Rosenfeld's book explores all the various ways that the ruling class exploits our system to serve their own ends, and where that leaves the rest of us. If you're worried that all the data and case studies crammed into 260-some-odd pages will make for dreary reading, fear not — "You're Paid What You're Worth" moves at a surprisingly fast pace, but maybe that's just because of the importance of what Rosenfeld's saying.

Read it and join the revolution!

[Jesek Rogers · Rating 4 out of 5]

Jesus how infuriating. We all know that Americans are grossly underpaid and underrepresented in our company's interests. We know that income inequality is growing more and more ridiculous & that only shareholders are seeing anything from all of this supposed economic growth. We know that Congress doesn't care about that because they ARE the shareholders & so are their donors. But seeing all of that laid out with specific legislation and a timeline of changes is still so insane. This has all been intentional and has all taken place alongside the demonization of those that are "living off the system" and just need to pull themselves up by the bootstraps. They'll call someone a job hopper or say that no one wants to work anymore. They'll say unions are greedy or that we need to blame undocumented workers.

This whole book is basically oh wow that should be illegal. It's a free market for companies and anything but for the workforce. We simply cannot continue to boast about our economy while ignoring that it's all coming from wringing every penny from the employees or whatever unlucky company was last bought out by private equity.

I will say I really struggled with the first few chapters, and nearly didn't continue. I just don't think Rosenfeld was as clear leading us into this discussion as he was once we were there. But man am I glad I pushed through.

[Nathan · Rating 4 out of 5]

An early venture for me into structured thinking about wages and labor markets. I think Rosenfeld provided some excellent frameworks and background, for instance, I think I’ll be carrying with me the mental model of: power, inertia, mimicry and equity. I appreciated that he was using some of his own research which I think added a lot of color.

I think the book’s organization wasn’t ideal for me. Generally, I become wary when I have to try especially hard to sift between the author’s (informed) opinion vs. what they’re providing as fact—which is probably how I felt reading this. I tend to be extra guarded and skeptical.

In particular, I struggled with what felt like a one-sided discussions about shareholder capitalism, collective bargaining, and fissuring, but that could be my own new-ness to the fields.

Overall, the book created more questions for me than I knew I had which I think is a big positive! And the author felt earnest and well-informed which is appreciated. I’m excited to learn more!

[Juju · Rating 5 out of 5]

This book is legitimately just more proof that the economic systems in place in the states are not some law of nature that exists and has to in order to maintain equilibrium but rather a fictional reality that allows rich people to stay richer! Would ya look at that. Land of the free (that are far and few <3)

[Kumar Ayush · Rating 4 out of 5]

Insightful. I agree with most of the ideas presented here.
As a book, it was quite disconnected. It was a lot of facts and conclusions, but they did not feel as strung together.

[Tyler K · Rating 3 out of 5]

Kind of a strange book! It reads a bit like someone's dissertation and, maybe due to it's myth-busting premise, doesn't always have a totally coherent message other than workers should be paid more. Starts with 4 elements that affect workers' pay: power, inertia, mimicry, and equity.

There is some interesting original research cited using survey data of workers and pay-setters (HR etc) about why workers are paid what they are (as individuals and in particular roles).

Would've loved it to go deeper into analysis about power and some of the cross-country comparisons. Raises some interesting questions about productivity and how impossible it is to measure individual performance. Other lessons include importance of information symmetry, like knowing the boss's financials, when bargaining over pay, how relative differences between coworkers' pay can undermine class solidarity (even more than an overpaid boss), and how fucked up stock buybacks are.

[Madalene · Rating 4 out of 5]

Good review of how pay is set, how pay at the top is wildly out of control, and how what we think of as "good" [masculine, union, physical labor] non-college degree jobs are not as important to attract as to improve the conditions for "bad" [feminine, customer facing, caretaking] non-college degree jobs that are skyrocketing in importance and need. However, this book is very dry and doesn't come together with a compelling set of recommendations in the end.

[Malcolmd · Rating 5 out of 5]

Deeply researched and compelling. The author convincingly upends simplistic Econ 101 concepts about pay for performance and the marginal productivity of individual workers. Rosenfeld presents evidence that power imbalances in the workplace (plus the power of imitation between competitors) shape compensation decisions. Essential reading for anyone who earns a paycheck and wants to understand who gets a larger slice of the pie and why.

[Izaak · Rating 4 out of 5]

Extremely impressed by this book. If you're a PoliSci nerd, economist, anti-captalist or just someone who is concerned with the state of the modern labor economy, this book is for you. Jake Rosenfeld makes a powerful yet succinct statement on the issues with how modern labor is evaluated.

[Legens · Rating 4 out of 5]

Theoretically and empirically strong book arguing that neither individual performance nor occupation sufficiently explain workers' pay - instead, power, inertia, mimicry, and considerations of equity do.

[P J M]

Solid summary

[Eric Boles · Rating 4 out of 5]

Outraged

[Yi Hang · Rating 5 out of 5]

At the heart of the problem of the income and wealth inequality is the power. Not just the power between capitalist and labor, but also between labor (CEO and minimum wage worker). Turns out that the classical invisible hands does not necessarily create a society that maximizes the society's surplus. Give it a read and you will see things differently.