Exhaustive New Study Suggests That Dating the Boss Pays — Until It Doesn’t

Thinking about striking up a romance with your manager? A new study suggests it might be good for your wallet, at least for a while. But if things go south, expect your paycheck to take a nosedive.A groundbreaking study using administrative data from Finland has put hard numbers on the old office taboo: dating the boss. The research, which analyzed the entire population of cohabiting couples in the Scandinavian country, provides a rare, large-scale look into the financial consequences of hierarchical workplace romances.The findings, published by the National Bureau of Economic Research, show that employees who start relationships with their managers see their earnings climb by an average of 6 percent. However, the good times come to a screeching halt if the relationships end, triggering an 18 percent drop in earnings.“We also find that these relationships generate spillovers: retention of other workers declines by six percentage points, with effects concentrated in workplaces where subordinates experience greater earnings gains. Our findings highlight both the private benefits and organizational costs of hierarchical workplace relationships,” the researchers say.While the “love bonus” is a nice perk, the “breakup penalty” is severe. Women who split from managers in their workplaces saw their earnings plummet by nearly $7,000 the following year. In contrast, those who broke up with managers from different companies experienced only slight slowdowns in their earnings growth.The study also found a notable gender divide. While the main analysis focused on women dating male managers — the most common scenario — the researchers noted, “Men who date female managers experience even larger earnings gains, while men suffer less from breaking up with a manager.”So, what’s behind the pay bump? The study explored two possibilities: the “nepotism channel,” where subordinates get benefits through favoritism, and the “merit channel,” where they gain valuable skills from their manager-partner. The evidence leans toward the former. Earnings gains were 50 percent smaller for employees who moved to new workplaces after starting the relationships, suggesting the benefits might be tied to their partners’ presence rather than newly acquired universal skills.But the drama doesn’t just affect the happy (or unhappy) couple. These office romances have a ripple effect. The study found that “retention of other workers declines by six percentage points” in workplaces where a manager and subordinate get together. This turnover was even higher in smaller offices and in workplaces where the subordinate received a larger pay increase, suggesting that the “appearance or reality of nepotism causes discontent among colleagues.”With more than a quarter of American workers admitting to an office romance and many firms like McDonald’s outright banning them, the study’s findings are timely. As the researchers note, such policies might have prevented famous couples like Bill and Melinda Gates or Barack and Michelle Obama from ever getting together.Ultimately, the research highlights a tough reality for companies: While love may be in the air, its financial fallout can spread across the entire office, creating “private benefits and organizational costs.”

Exhaustive New Study Suggests That Dating the Boss Pays — Until It Doesn’t

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