On number 3, it may also simply be that those jobs that are valuable as a stand-alone function are on average less lucrative than those that are more deeply intertwined with others; if that makes any sense.

First, thanks for your well thought out response.

1. I agree that the data is weak. I was just amazed at the size of the gap between average employee income and self-employed income. A more careful study would be needed to draw strong conclusions.

2. I would argue that a raise or promotion is a financial incentive. The hierarchical structure of businesses is one big financial incentive. CEOs get paid a lot, in part, to motivate others to work hard so that they might one day be CEOs.

3. Your third point is interesting. I agree that division of labor is critical to productivity. Self-employed people may be less productive because they have to do too many different roles.

4. I agree there are non-financial incentives. I believe they are more important than the financial ones. Engaging employees is really about using non-financial incentives.

It seems to me that we are really making the same point.

2. You forget that whoever has a claim on the profits made by a company has every incentive to make sure that their employees find it in their interest to be as productive as possible. So while there may not be direct financial incentives for a specific employee (IE, they make more money if they produce more, less if they produce less, etc) there still will be very important incentives; whether or not they get a raise or promoted, or whether they are fired, etc.

3. Often one individual’s work is only as valuable as the other, complementary work being done by others within an institution. The assembly line being the most obvious example; one worker in the line is only doing something valuable to the company if all of the other workers are also doing their jobs before and after him.

Finally,

4. Financial incentives are not the only incentives. Saying that someone has an incentive to do something only means that it is in their interest. Reducing psychological or social unpleasantness is a reason doing something might be in someone’s interest. Hope for climbing the latter in the future, or getting better pay later with a new employer who recognizes one’s productivity, are also incentives to be productive.

“Interesting” and “meaningful” are nice words, but if you don’t get enough productivity out of your employees and your competitor does, you’ll risk going out of business and having no employees to “engage”.