Question

Computer programmers work under much more pleasant conditions than garbage collectors. Yet, according to the Bureau of Labor Statistics, the median salary of a sanitation worker is about $35,270 and the median salary of a computer programmer is about $79,840. True or false: This shows that the theory of compensating wage differentials is wrong. Explain.

Answer 1

The given statement in FALSE

This is because theory of compensating wage differentials holds not only for difference in work conditions of workers but also for difference in the human capital required to do the job.

In case of sanitation worker, only manual labor work is required to do the job; while in case of a computer programmer high education level and a specific skillset (or, human capital) is required to do the job.

This means the computer programmers should be paid more to compensate them for the additional studies they have done and additional skillset they possess.