Pay fairness and employee outcomes: Exacerbation and attenuation effects of financial need

The consequences of pay fairness perceptions are rarely explored, in part because of the lack of a compelling theory which relates pay attitudes directly to distal health and behavioural outcomes. We propose financial need as a potential moderator of the relationship between pay fairness and employees' physical health, psychological health, and work‐related behaviours. Differential exacerbating and attenuating effects are predicted for various outcomes. In a longitudinal study of 651 employees of five American mid‐western organizations, exacerbation predictions were strongly supported in cross‐sectional analyses for life satisfaction, depression, and somatic complaints. Attenuation predictions received support cross‐sectionally and longitudinally for job search intent, but were not supported for performance, absenteeism, or voluntary turnover. The importance of these results for understanding pay dynamics and for outlining mid‐range theories is highlighted.