Work Motivation

During 1992 and 1993, I undertook a field study in the Northeast of the United States to learn why wages and salaries seldom fall during recessions.1 I interviewed more than 330 business people, labor leaders, counselors of unemployed workers, labor market intermediaries (headhunters), labor lawyers, and management consultants. The purpose of the study was exploratory; much of my effort went into the search for hypotheses rather than tests of specific ones. For this reason, I did not require informants to answer a fixed list of questions, but informed them of the purpose of the study and invited them to tell me what they thought was relevant. I intervened only occasionally to seek clarification, show interest, or nudge the discussion in new directions. Only after informants had spoken at length did I ask specific questions to cover points that interested me. I usually avoided asking about economic theories until the end of interviews. Such questions sometimes stopped conversation, because the theories seemed naive and the questions led respondents to try to think like an economist, rather than to explain their world concretely in their own terms. Some business people refused such open-ended interviews, probably because they feared that while talking loosely they might say something that would embarrass them or hurt their company. I concluded that low response rates might make a random sample unrepresentative. (I had much less difficulty gaining the cooperation of the other types of respondents.) Most interviews with business people were obtained through personal contacts or by telephoning people and persuading them to cooperate. Often, people I interviewed arranged further interviews. I strove to avoid sample bias by holding interviews in a large and diverse set of companies as well as by using many distinct avenues of approach to gain access to them. Using these methods, I avoided talking to people from only a few circles of friends. The companies represented a broad spectrum of industries and a full range of sizes and financial conditions. Some were bankrupt, many were shrinking and experiencing heavy layoffs, and some were growing rapidly. Some had been founded only recently, while most were well-established. Some were unionized, whereas many had no union presence. Some were public corporations and others were closely held or family-owned. I made a point of finding businesses that had cut or frozen pay during the recession. There were few such; most firms continued to grant regular raises. My method did not yield a valid opinion survey nor reliable statistics on the incidence of various business practices. I believe, however, that I gathered valuable information about what happens in the labor market during a recession and what business people and labor leaders think about layoffs and pay cuts. The explanation of wage rigidity given by more than 275 business people and labor leaders I interviewed was based on views of worker motivation that deviate from the standard model. In this paper, I formulate a somewhat speculative model of work motivation stimulated by what I heard. The model incorporates ideas from psychology into the utility-maximizing framework of economics.