Saturday, March 22, 2014

Underpaid or overpaid?

In 1994, a Roper Reports survey listed a number of occupations, and for each one asked if "people in that occupation are generally overpaid, or underpaid, or paid about right for what they do?"  Here they are, arranged from regarded as most overpaid to regarded as most underpaid:

Celebrities and entertainers                    +86
Professional athletes                           +85
Lawyers                                         +81
Presidents of major business corporations       +74
US Senators and Congressmen                     +65
Doctors                                         +63
TV news anchor people                           +57
Senior level managers in the federal government +53
Investment bankers                              +51
Middle level managers in the federal government +38

Military officers                                -2
Long-distance truck drivers                     -37
Nurses                                          -40
Skilled factory workers                         -45
Policemen                                       -51
Public school teachers                          -58
Secretaries                                     -61
Restaurant workers                              -80

The numbers are the difference between the percent saying overpaid and the percent saying underpaid.  For example, 87% say celebrities and entertainers are overpaid, and one percent say they are underpaid, for a score of 87-1=86. The basic pattern is that people say occupations with high pay are overpaid and occupations with low or moderate pay are underpaid.  But that raises a question of why investment bankers, a famously well-paid occupation, don't rank higher.

Perhaps it's because with most of the high-paying occupations that they asked about, there is an obvious zero-sum element: people figure that if they made less, prices or taxes could be lower, or ordinary workers in their companies would get paid better. But investment bankers don't directly sell anything to the public, so people don't see who would gain if they got paid less. If this is correct, it may help to explain why the rise in top incomes over the last few decades hasn't caused much public reaction. High salaries in finance, which has contributed a lot to the rise in inequality, just seem to appear, rather than to be gained at anyone's expense.

Note:  data from the Roper Center for Public Opinion Research


  1. The early and mid-1990s, to my recollection, were also a much less booming (and hence publicly prominent) time for investment banking, compared to the roaring 80s and the dotcom bubble that ran from roughly 1995 or 96 to 2000. Kidder Peabody, LTCM, Barings and of course Drexel all failed around that period if I'm not mistaken. Maybe in 1994 when this survey was done the pollsters just caught the public at a relatively low-water mark of hostility to bankers.

  2. I don't think that people are very sensitive to current conditions on questions like this. Of course, I can't prove that, but see my post of 3/26/13 for some suggestive information.

  3. You are probably right on that. Too bad the '94 Roper survey didn't ask if people thought that organized crime was overpaid or underpaid as a profession.

  4. 1994 predates the financial boom of the stock market in 1995-2001 and the 1998-2006 housing bubble. I think in 1994 a major seed of banking deregulation was planted. It would be interesting if other names were used (and I know they have been) like "Wall Street" or "bond traders." celebrities are much more well known than hedge fund managers, think of Tom Cruise's thus far lifetime net worth (let's say $250 million) and then compare that to a handful of hedge fund managers who accrued $1 billion in a single year of trades (of course many of the trades were in the works years before they realized the income).

    -Tom Volscho