While it is not always clear what is fair, and people's judgments of fairness can be biased by their self-interest, there is a growing sense that the present disparity in wages is unfair. When executives argue that wages have to be reduced or that there have to be layoffs in order for corporations to compete, but simultaneously increase their own pay, workers rightly consider that what is going on is unfair. That will affect their effort today, their loyalty to the firm, their willingness to cooperate with others, and their willingness to invest in its future.
Fairness in compensation is often subjective, but there is a notable perception that current wage disparities are unjust. Many workers feel that when executives advocate for pay cuts or layoffs claiming the need for corporate competitiveness while simultaneously raising their own salaries, it creates a strong sense of inequity. This imbalance can lead to significant discontent among employees.
Such perceived unfairness can negatively impact employees' motivation, loyalty, and cooperation within the company. Workers may become less inclined to invest in the organization's future when they feel treated unfairly. This situation exemplifies the broader issues discussed by Joseph E. Stiglitz regarding inequality and its implications for society.
