Scientists put a price on office romance — and it's in the thousands
It’s the stuff HR nightmares are made of. A trio of international researchers — based in British Columbia, California and Finland — has co-authored a paper that examines the links between romantic relationships with the boss and salary.
The bottom line: entering a relationship with a manager increases the subordinate’s earnings by an average of six per cent, while breaking up triggers an “abrupt” 18 per cent earnings decline. Breaking up isn’t just hard to do; it’s expensive.
What’s more, retention of other workers falls when romantic relationships take hold, and the more the subordinate gains in wages, the greater the effect on others.
The paper, “The Impacts of Romantic Relationships With the Boss,” was published this month by the National Bureau of Economic Research, which is based in Cambridge, Mass.
The researchers used data from Statistics Finland to analyze the employment administration statistics of Finnish office workers across a variety of sectors over 30 years, from 1988 to 2018. They studied salary information for 1,010 manager-subordinate workplace couples, as well as 728 instances of breakups.
It’s messy work, as the researchers freely admit. They identified the end of a relationship as the moment when the workplace couple stopped living together. But determining the beginning was more difficult.
Since most couples start dating before moving in together, they wrote, “we specify the two years before cohabitation as the ‘dating period’ and define the first year of this period as the event year of interest when estimating the impact of forming a relationship with a coworker.”
They also noted that they didn’t study colleagues who start a relationship but never move in together, nor those who were asked out by a coworker but declined. “Understanding the economic impact of these interactions would be interesting, but it is beyond the scope of our data,” they admitted.
The study looked mostly at female subordinates dating male managers, and found that these women saw a raw earnings growth of 22 per cent between the year before the dating period began and the year after, compared to 16 per cent growth over the same period among women in a control group.
On the flip side, the study found a “clear and stark pattern” for women who broke up with a workplace manager; their earnings fall by 18 per cent the year after the breakup. (In contrast, women broke up with a manager from a different workplace saw a slowdown in earnings growth but no drop in earnings.)
In terms of actual dollars — or in this case euros, since the couples were drawn from data in Finland — the boost in pay from dating a manager amounted to about 4,000 euros (about $6,500) while the hit from breaking up came to 6,000 euros (about $9,700). “These negative effects persist for at least four years after the breakup,” the researchers wrote.
They also tried to tease out whether the salary bump was due to favouritism or merit, the second possible if the subordinate was learning new skills or receiving mentoring from the new partner.
“While it is challenging to distinguish between the two, we provide some suggestive evidence,” they concluded. Among the findings — salary increases dropped dramatically if either partner moved to a new workplace while the relationship continued.
“Regardless of the cause,” they wrote, “higher earnings gains for those in relationships with a workplace manager could lead to resentment among coworkers who might (rightly or wrongly) view this as preferential treatment.”
Sure enough, workplaces that were home to manager/subordinate relationships saw a higher number of departing workers of both sexes. On average, a workplace with 71 employees would see an additional four departures.
“A potentially useful firm-level intervention based on our results is to prevent managers from having a direct influence on the career trajectories of their subordinate partners,” they wrote. “Our findings suggest that other employees dislike these relationships, particularly when they are associated with higher earnings for the subordinate partner. This means that regardless of whether the earnings gains obtained by subordinate partners are due to favouritism, the appearance of favouritism should be curtailed, as it can lead other workers to leave the firm.”
A more direct intervention is to ban such relationships altogether, as is the case with McDonald’s. The restaurant chain fired CEO Stephen Easterbrook in 2019 for a consensual relationship with a subordinate.
“Yet such bans come with their own costs,” they wrote. “If similar rules had existed at Microsoft or Sidley Austin Law Firm, Bill and Melinda Gates and Barack and Michelle Obama would have been barred from dating.”
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