Why Higher Salaries Aren’t Creating Happier Employees

Salary is, understandably, one of the most important factors employees look at when applying for a new job. Not only that, salaries alone influence many people’s choices when it comes to their education and career paths. While there is no denying the appeal of a generous salary, in reality, this may not be the key to producing happier employees.

According to new research from Purdue University, which included data from a Gallup World Poll of over 1.7 million people, the ideal salary is $95,000. More interesting, though, is that this finding does not translate to “at least” $95,000. Those making more than this threshold actually reported a reduced life satisfaction as well as lower levels of overall well-being. Additionally, the study found that incomes in the range of $60,000 to $75,000 were enough to achieve emotional well-being.

While $95,000 is nothing to complain about, one might be surprised that people making six figures (or more) aren’t reporting higher levels of happiness and satisfaction with their lives. This might be explained by the way income can change how people experience happiness, according to a smaller study conducted by University of California–Irvine. In that study, those with lower salaries focused more on experiencing happiness by connecting with others or their environment, whereas those with higher salaries experienced emotions that focused on themselves and their personal achievements.

Research from Binghamton University also suggests that money can be a great tool for motivation, but maybe not for overall optimism. In their study, they discovered individuals that viewed wealth and material possessions as a sign of success were associated with increased ambition and life satisfaction. Those that derived happiness from wealth and material possessions alone were not as optimistic or satisfied.

Of course, getting a paycheck is great. The studies aren’t suggesting that money can’t make employees happy, but they do offer a realistic look to how employees respond to what they earn. It shows that there is a limit. At some point, there are factors beyond money that can better support employee emotional health, and that point should not be ignored by employers.

A Holistic Approach To Well-Being Ensures Happiness

While financial compensation will always be valuable to employees, companies shouldn’t lose sight of the fact that this is not the only way to create optimistic workers. Employers that want to create truly satisfied, happy, and fulfilled individuals should make sure they provide comprehensive benefits that cover all areas of their well-being. Valuing an employee’s physical, mental, emotional, and social needs will also improve employee retention.

Oftentimes, workers’ performance and productivity are negatively impacted by non-work problems, such as a personal health concern or an issue with family members. Having the time, resources, and support to address all of those concerns as they arise alleviates stress, improves overall well-being, and leads to happier employees.

Benefits such as generous and flexible time off, caregiving support, mental health support, and physical health resources all help employees as they work towards a healthy work-life balance. Coupling these holistically-minded benefits with a positive and encouraging work environment is the perfect way to show employees that they are valued and appreciated. Additionally, simply offering a varied benefits package can open up employees to taking care of other areas of their life (beyond basic physical and financial needs) that they may not have put much energy, thought, or time into before. For employers, happier and healthier employees means more productive employees, due to better mental focus, creativity, collaboration with coworkers, and work performance.