It is undeniable that we gain numerous non-financial benefits from work. Often any examination of these benefits focuses on things such as purpose or friendship. A recent paper from Bocconi University explores the value we assign to workplace amenities.

The paper highlights how such amenities can create a differential between workplaces and therefore help to attract talent to the organization. Measuring the value workers place on such amenities has traditionally proven difficult, however.

Safe workplaces

One such amenity is the provision of a safe workplace. The researchers wanted to examine how workers value safer workplaces, even beyond the immediate risks posed by Covid.

“Our analysis focuses on front-line hourly workers, mostly in services and retail jobs, who have limited opportunities to work from home and face a choice between risking their health and losing their income,” the authors explain. “We study their weekly labor supply under varying risk scenarios.”

The study examines the value we place on workplace safety according to the behavior changes when their employer invests less in safety. They reason that workers are usually less responsive to financial incentives when their primary motivation at work are non-financial factors, such as via enjoyable work or strong relationships with colleagues.

By contrast, when employers fail to provide adequate health and safety, they argue that returns to work are far more dependent on financial incentives, and therefore budget discontinuities can have a significant impact on the supply of labor.

Making the move

The researchers use the introduction of the Federal Pandemic Unemployment Compensation (FPUC) during the pandemic, which provided workers with a $600 weekly wage supplement if they earned below a certain amount. The eligibility threshold differed in different states, such that 21 different thresholds were in operation, which allowed the researchers to compare two otherwise equally paid workers across different states and see how they responded to changes in investment in health and safety.

The results show that people are happy to give up around 34% of their income in order to reduce their risk from Covid by one standard deviation.

“Converting the willingness to pay (WTP) into an hourly wage rate, this effect is equivalent to a $6 wage decrease; or it implies that workers are willing to pay 1% of their income to lower their fatality rate by one in a million,” the researchers explain.