Compensating Differentials in Action
What are the annual incomes of people who build water towers? According to this article in the Columbia Daily Tribune, they average over $79,000 per year in Missouri (not including benefits and overtime pay). This is a very dangerous job:
Any man on the crew will tell you he earns every penny of his paycheck. The job takes them away from their families more than 300 days a year, and it holds undeniable hazards despite regulated safety precautions. Working some 200 feet above ground, crewmembers straddle beams and stand atop scaffolding, guiding each piece of crane-lifted metal into place and meticulously welding together the 500,000-pound structure.
They must rely on harnesses, hardhats and sheer nerve for their sense of security.
Economists talk about "compensating differentials" in labor markets. Consider two jobs, a dangerous one and a safe one. Other than that, the jobs are exactly the same to workers. Workers in the dangerous job will earn a wage differential that compensates them for the risks on the job. This is a compensating differential.