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Study finds link between higher wages and less theft at a company


A recent study conducted by researchers from the University of Illinois looked at the correlation between a worker’s wages and the likelihood of the employee stealing. They found the more money they get paid, the less likely they were to steal from the business.

“There’s actually very little research on the effect of wages on employee theft,” said co-author Clara Xiaoling Chen. “A seminal study conducted in the field has examined what happens after a firm cuts workers’ pay. What’s different in our paper is that there’s no such shock as a pay cut, whose effect is typically short-lived and does not persist. The fact that we can document the relation in our study using cross-sectional data suggests that the effect of wages on employee theft can persist over time.”

The researchers discovered there were two main reasons why an employee would not steal after receiving higher wages. The first being the worker is less likely to steal in order to keep their relatively-high paying job, and the second reasoning is the type of worker the company will garner is likely more honest because of the higher wages. In addition, there is a “wage tipping point” in which the cost of paying the employee is less than the employee theft cost.

The study authors also found employees who were paid relatively higher wages promoted social norms within the company and with co-workers.

“Our research provides systematic empirical evidence that wage premiums do play a role in reducing employee theft and fostering more ethical norms within an organization,” Chen said. “The takeaways from our study are likely to apply to other types of retailers, such as restaurants, department stores and drug stores, and to service or consumer products firms with similar monitoring environments, where the payoffs from stealing are not disproportionately high relative to potential wage premiums.”

There are other ways employers can ensure their employees are less likely to steal including showing that the employer cares by finding other ways to thank the workers for their determination. Employee monitoring is another way for company owners to keep tabs on their workers, but to ensure the employee still values their job, the employer should be open about any monitoring systems, such as security cameras, are in place.