
Does Transparency Lead to Pay Compression? (2016) [pdf] - Dowwie
https://www.princeton.edu/~amas/papers/transparency.pdf
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calafrax
IMO salary secrecy is a weird fetish and probably counter productive.

If the differences between employee salaries are not economically defensible
then they should not exist.

If employees cannot accept the way that their employers have measured their
relative value then they should get a different job.

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cirgue
I am paid less than one of my peers who has a masters from a prestigious
university. I am cool with this: they have more debt and a larger skill set
than me. However, I am thankful that other people in the organization do not
see the difference in our salaries, because I would certainly be treated
differently by people outside the team. Salary gets used as a proxy for
competence: why do you think people stupidly expensive luxury cars as daily
drivers?

~~~
phamilton
I'm fascinated by how cashflow (student loans, mortgage, family, etc) affects
compensation. Given two equally skilled individuals (including ability to
negotiate) but one has a bigger mortgage,y hypothesis is the the one with the
bigger mortgage will get paid more.

I believe cashflow requirements make negotiating easier (provided there is
room for negotiation). I'm not even going to entertain your offer for $120k.
Not because I know my market value is greater than that, but because I cannot
meet my financial obligations at that point. Even if I'm a clumsy negotiator,
I'll get closer to my max compensation in that situation purely because I have
a higher floor.

~~~
Asooka
It makes sense, in a way. You base your pay on $MONTHLY_LIVING_EXPENSES +
$DESIRED_MONETARY_GAIN. You can't really change your MLE by much (not in any
short timeframe anyway), so your salary negotiation starts off depending on
that. In which case two people with different MLEs will bargain for different
salaries with the same DMG, in the end receiving equal gratification from
their different salaries.

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gcb0
...in the public sector.

public sector in california lead to high attrition regardless of public or
closed pay.

comparing that to any other field or state is bogus from the get go. shame on
this manipulated conclusion.

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duncan_bayne
I work for a company that has open salaries - and a model by which those
salaries are calculated.

Marty gave a talk about it back in 2015:

[https://www.youtube.com/watch?v=sf5r4yLTc9k](https://www.youtube.com/watch?v=sf5r4yLTc9k)

My experience is that it works very, very well - at least in the iteration we
now have. I'm happy to answer any questions folks may have.

~~~
ruty
there is a company already doing that and beyond.They call themselves "buffer"

[https://buffer.com/transparency](https://buffer.com/transparency)

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baybal2
There are countries where it is common to hire without having wage
negotiations. Look at all Russian IT job sites: more than half of all job
posts look like "senior computer programmer - $2000k ± $10 per month", and
there will be few job posts with 3000 and higher montly wages, but the
application counter for each of them will go from few hundreds to 65535

~~~
Asooka
Russians don't like to bargain mostly. I suspect (but please correct me if
this sounds too wrong/offensive), that it's a vestige of the planned economy
they had - all salaries and prices set by the state, no bargaining allowed.
It's a simpler system and removes not only a layer of stress, but also a layer
of conflict between you and the employer.

Though, if I were offered $2000k/mo, I wouldn't feel the need to bargain at
all ;)

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Frondo
Bargain about salary, or bargain in general?

I lived for a while in a post-Soviet country, and bargaining was a regular
part of every day. At the bazaar, in private cabs, even at black-market money
changers if you were brave/stupid enough to use them.

My brother-in-law is Russian, too, and I've seen him haggle over cars,
electronics, home appliances, any "major" purchase.

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ecesena
I think he was joking about the typo, 2000k/mo is 2M/mo

~~~
baybal2
Oh my, that's a typo. Yeah, do not hang out on internet forums late night

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kirab
Allow me to ask the question why "Pay Compression" is considered a bad thing?

Does it make the world more just?

Are you really working a hundred times harder than the people who pick up your
trash?

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sk0g
In Sweden you're supposed to be able to see anyone's income information, I
wonder how things work out there.

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walshemj
It tends to lead to pay inflation what you mean Joe Blogs is getting x

~~~
cryptonector
Perhaps initially, but since there's a limit to how high total compensation
can go for all employees put together... the effect will be to compress
compensation differences. The same is true if it should initially lead to
deflation (e.g., if total compensation is already at the limit, then some of
the more highly compensated employees will have to see their compensation cut
in order for less-generously compensated employees to see theirs improved).

Ignoring macroeconomic effects, this should just lead to compression of
compensation deltas regardless of whether it also leads to inflation or
deflation. Now, if every State did this suddenly, and if transparency were
required of the private sector as well, then there might be macroeconomic
effects as well, such as higher inflation (or faster deflation), and I won't
hazard a guess as to which.

~~~
walshemj
doesn't seem to have worked for CEO compensation

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a_imho
tldr, the conclusion:

 _This paper has presented evidence that making wages public compresses the
top of the public sector wage distribution. The evidence assembled is more in
line with a “populist” response to visibility of top salaries than the effect
of making public officials more accountable: salaries are cut because they
appear excessive, regardless of whether or not they actually are._

I did not spend enough time on the paper to comment on the measurement
details, however I would rather trust the public's opinion on what is
excessive.

Also I find it a bit ill posed to study the effects of making public wages
transparent. They should be by default.

~~~
gcb0
no need. they compare California (high competition from private sector) with
other states without such competition.

they could manipulate it to proove any point. with the same data I could say
that with sunnier days lead to more employee attrition. any point that
California differs from the other state can be blamed, after the author
ignored the private sector salaries, and he chose to pick a competing state
without salary transparency to make their point.

