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English Composition Essay
Evan Gassman
College of Business, Western Governors University
[REDACTED]
September 29, 2023
, 2
Do higher wages mean more productive workers?
In today's rapidly evolving landscape of labor and employment, the question of worker
compensation has widely emerged as a topic of significance, going beyond the traditional
confines of economic exchange. In the world of business, worker productivity stands as a
fundamental and crucial aspect of success. However, the intricate interplay between
compensation and wages and their impact on worker efficiency warrants a closer look.
Interestingly, this topic has been the subject of extensive research over the years, and the
outcomes from numerous studies have demonstrated significant variation, frequently resulting in
inconclusive or trivial findings. Unfortunately, there seems to be overwhelming mixed feelings
about this topic in the field of economics.
Thankfully, there is still a substantial body of research studies that support the idea that
higher wages do correlate with increased productivity. Higher compensation for workers is not
just a matter of fairness but also a strategic investment for employers, as it has been consistently
shown that better-paid employees exhibit increased performance, productivity, and efficiency
compared to their counterparts receiving lower or minimum wages.
According to Michael Strain, “When studying compensation for production and non-
supervisory workers, Stansbury and Summers find that a one percentage point increase in the
growth rate of productivity is associated with a 0.53 percentage point increase in the growth rate
of compensation” (Strain 2019) This observational study emphasizes the crucial link between
worker productivity and fair compensation. It implies that as employees become more
productive, they should also see commensurate increases in their wages.
However, this also works the other way around, implying that as workers earn more, their
productivity increases. “But Gordon’s research implies that the relationship can go both ways:
English Composition Essay
Evan Gassman
College of Business, Western Governors University
[REDACTED]
September 29, 2023
, 2
Do higher wages mean more productive workers?
In today's rapidly evolving landscape of labor and employment, the question of worker
compensation has widely emerged as a topic of significance, going beyond the traditional
confines of economic exchange. In the world of business, worker productivity stands as a
fundamental and crucial aspect of success. However, the intricate interplay between
compensation and wages and their impact on worker efficiency warrants a closer look.
Interestingly, this topic has been the subject of extensive research over the years, and the
outcomes from numerous studies have demonstrated significant variation, frequently resulting in
inconclusive or trivial findings. Unfortunately, there seems to be overwhelming mixed feelings
about this topic in the field of economics.
Thankfully, there is still a substantial body of research studies that support the idea that
higher wages do correlate with increased productivity. Higher compensation for workers is not
just a matter of fairness but also a strategic investment for employers, as it has been consistently
shown that better-paid employees exhibit increased performance, productivity, and efficiency
compared to their counterparts receiving lower or minimum wages.
According to Michael Strain, “When studying compensation for production and non-
supervisory workers, Stansbury and Summers find that a one percentage point increase in the
growth rate of productivity is associated with a 0.53 percentage point increase in the growth rate
of compensation” (Strain 2019) This observational study emphasizes the crucial link between
worker productivity and fair compensation. It implies that as employees become more
productive, they should also see commensurate increases in their wages.
However, this also works the other way around, implying that as workers earn more, their
productivity increases. “But Gordon’s research implies that the relationship can go both ways:
