Back in 1776, Adam Smith noted: for the same skill level, work that is unpleasant, dangerous, dirty, or requires an unusual schedule should be paid higher — otherwise, no one will take it. Economists later called this compensating differentials: the difference in wages compensates for the difference in non-monetary conditions.
The logic is flawless. Two vacancies, identical qualification requirements, but one involves night shifts and physical risk, while the other involves an office and a standard schedule. To fill the first one, the employer will have to pay extra — exactly as much as necessary so that for a sufficient number of people the choice becomes equivalent.
In practice, the theory does not always work — and that is more interesting than the theory itself. There are entire market segments where unpleasant and dangerous work is paid lower, not higher, than comfortable work. The mechanism breaks down for several reasons.
First: compensation requires a real alternative. Smith implicitly assumed that a worker could choose another job. Where there is no choice — a narrow local market, limited mobility, the inability to wait — agreeing to poor conditions does not mean they have been compensated. It only means there were no other options.
Second: the worker must understand what they are being paid extra for. Risks that are immediately visible — heights, night shifts — are compensated significantly more often. Deferred or non-obvious risks — occupational hazards, burnout, lack of career prospects — almost never enter negotiations because they are not visible at entry.
Third, the most unpleasant one for HR: non-monetary conditions often correlate not with wages, but with each other. A job with a bad schedule is more often a job with a bad manager, weak training, and worse prospects. Instead of compensation, accumulation occurs.
What this means in practice. If a company has roles with objectively worse conditions — night shifts, on-call duty, business trips, physical exertion — and they are not paid higher than roles comparable in grade, the company is not saving money. It pays that exact same difference through turnover, the time it takes to fill vacancies, and the quality of the candidate pipeline — just in another budget line and without the ability to manage that line.
A useful check: compare not only salaries by grade, but also non-monetary conditions within the same grade. If two people are formally at the same level, but one works in noticeably worse conditions without a premium — this is not the fairness of the system, this is its blind spot.