Stingy raises are less odious, but stingy raises year after year create “inequitably” large pay spreads for workers with the same job description. Most firms avoid such inequities with formal pay scales: every job has a pay grade, and every pay grade has a salary range.52 Unless they change jobs, good workers eventually max out, and bad workers eventually min out. This process is slower than it sounds because few firms base raises on merit alone. Instead, firms tend to give across-the-board raises to all their workers, then tack on merit raises for high achievers.53 In the long run, employers
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