Many managers are influenced by dangerous myths about pay that lead to counterproductive decisions about how their companies compensate employees. One such myth is that labor rates, the rate per hour paid to workers, are identical with labor costs, the money spent on labor in relation to the productivity of the labor force. This myth leads to the assumption that a company can simply lower its laborcosts by cutting wages. But labor costs and labor rates are not in fact the same: one company could pay its workers considerably more than another and yet have lower labor costs if that company's productivity were higher due to the talent of its workforce, the efficiency of its work processes, or other factors. The confusion of costs with rates persists partly because labor rates are a convenient target for managers who want to make an impact on their company's budgets. Because labor rates are highly visible, managers can easily compare their company's rates with those of competitors. Furthermore, labor rates often appear to be a company's most malleable financial variable: cutting wages appears an easier way to control costs than such options as reconfiguring work processes or altering product design.

    The myth that labor rates and labor costs are equivalent is supported by business journalists, who frequently confound the two. For example, prominent business journals often remark on the "high" cost of German labor, citing as evidence the average amount paid to German workers. The myth is also perpetuated by the compensation-consulting industry, which has its own incentives to keep such myths alive. First, although some of these consulting firms have recently broadened their practices beyond the area of compensation, their mainstay continues to be advising companies on changing their compensation practices. Suggesting that a company's performance can be improved in some other way than by altering its pay system may be empirically correct but contrary to the consultants' interests. Furthermore, changes to the compensation system may appear to be simpler to implement than changes to other aspects of an organization, so managers are more likely to find such advice from consultants palatable. Finally, to the extant that changes in compensation create new problems, the consultants will continue to have work solving the problems that result from their advice.

    Acting on the recommendation of a British government committee investigating the high incidence in white lead factories of illness among employees, most of whom were women, the Home Secretary proposed in 1895 that Parliament enact legislation that would prohibit women from holding most jobs in white lead factories. Although the Women's Industrial Defence Committee (WIDC), formed in 1892 in response to earlier legislative attempts to restrict women's labor, did not discount the white lead trade's potential health dangers, it opposed the proposal, viewing it as yet another instance f limiting women's work opportunities. Also opposing the proposal was the Society for Promoting the Employment of Women (SPEW), which attempted to challenge it by investigating the causes of illness in white lead factories. SPEW contended, and WIDC concurred, that controllable conditions in such factories were responsible for the development of lead poisoning. SPEW provided convincing evidence that lead poisoning could be avoided if workers were careful and clean and if already extant workplace safety regulations were stringently enforced. However, the Women's Trade Union League (WTUL), which had ceased in the late 1880's to oppose restrictions on women's labor, supported the eventually enacted proposal, in part because safety regulations were generally not being enforced in white lead factories, where there were no unions (and little prospect of any) to pressure employers to comply with safety regulations.