Salaries are a dysfunctional market like health care. No market can function properly without all parties having the same information.
All arguments against salary transparency seem to be that people will be unhappy when they find out that the company has screwed them over and therefore it's better for these people to be ignorant.
> No market can function properly without all parties having the same information.
Salary info is a very small piece of the information needed to evaluate the fairness.
The article details quite extensively how difficult it is to communicate the totality of information in all but a few circumstances. If everyone could see every piece of relevant info then I'd agree.
One example: my value to the company may be for something you see as worthless. But you don't have the full strategic roadmap of the company's leadership in mind when you devalue my contribution. And the company may have valid reasons for not making the strategy widely known in the company. If you learned that I got a big raise for my success in that area, you'd feel slighted. The problem there isn't lack of info re: salaries, it's the impossibility of every employee having every bit of info needed to make the assessment.
Surely then the company could explain this reason. More trustworthy? Something else? This would give the employee the option of trying to improve that aspect their performance.
I’m not saying this is easy, or without pitfalls, but the biggest reason I’m for transparency is that it helps protect against unfair salary discrepancies.
> No market can function properly without all parties having the same information
What markets function like this? I have no idea what the cost of growing, harvesting, shipping, and selling a banana is. At every step of this process there are capital investments, labor costs, and profit margins that are totally opaque to me. And yet I can look at the price of a banana and decide if I want to spend the money or not. One beautiful aspect of markets is that not everyone has to spend years researching every purchasing decision. The makert sets a price for you. If one company has margins that are too high, another steps in to take some of that profit, by offering at a lower price until it reaches equilibrium.
The job market seems similar. I don’t know how companies set their offer price but I am capable of evaluating offers all the same.
You know how much a banana is worth because you've seen how much people charge for bananas from different origins in different grocery stores. Knowing how much your peers are getting paid is important information when evaluate an offer, and helps to ensure a more efficient job market.
So you feel that if you knew that other consumers paid different prices for the same products but that information wasn't available to you that would be fine?
That would be the equivalent analogy. That you know you are paying the same price for bananas from the corner store as everyone else.
> If one company has margins that are too high, another steps in to take some of that profit, by offering at a lower price until it reaches equilibrium.
Right, but that mechanism is only possible if information is public. You don't know about the pricing of growing, harvesting, shipping and selling bananas - but it's possible to find out, and a company looking to enter the market would find out. You can rely on market pricing because the market lets you outsource your research to other market participants, but that only works if research is possible in the first place.
I can go a lot of stores and ask them how much a banana costs. Then I can compare prices. However, I can't go to companies and ask them how much they pay for a position. That means I can't compare. I don't know what the market price is.
No, you completely discount human nature here. There are far too many people who are more concerned about what others get and have than is healthy. Plus in many work environments you end up with those who either think that one party is not justified in their rate or that they themselves are woefully under compensated. Worse, you have a bunch who will not work beyond what they think is "fair".
I like the privacy of my coworkers not knowing my exact compensation, it is not their business. If we follow your logic to its natural end, why not force disclosure of all expenditures each of us make as well? (which on another topic, that is the best reason to never have digital currencies)
It's almost like trying to argue that doctors shouldn't heal their patients because it would be too upsetting for them to change themselves. How about we give them the information they need to learn how to make proper evaluations of their situation? Yes people can be stupid about things. But keeping information from them is not the cure for this, it is the cause. People would not be so concerned if they were part of a professional culture which rewarded them for responding maturely to such discrepancies.
If team cohesion breaks down because pay information is revealed, give them pay cuts for being petty and disruptive. This is not an unsolvable conflict. People are not advantaged by remaining ignorant of their status in a transaction.
>I like the privacy of my coworkers not knowing my exact compensation, it is not their business.
It is their business to conduct the business of the company which employs them, which includes the distribution of that company's funds. Maybe people in other companies don't need to know, but people in yours do, because it is their business.
> No, you completely discount human nature here. There are far too many people who are more concerned about what others get and have than is healthy.
This is a great point, and let me add that it becomes 10x worse when money is involved. Some (many?) people are just flat out irrational when it comes to money. Jealously and envy quickly block any rational thought when it comes to explaining why someone might make more than they do.
In Norway salary information is public, but with a catch. If you ask for someone's salary information they learn who made that inquiry. This might be as good as you can get with getting salary transparency and mitigating privacy concerns.
I know I once dealt with a case where a senior manger (paid roughly 4x the median wage) was really upset as he no longer qualified for a business needs phone at home which was something like £15 quid a month
No, there're other arguments as well. One of which is privacy, for example. Many people value their privacy more than some elusive goal of full transparency.
If you consider that private information. Plenty of people, inside the company and outside, know that information. It's not that personal in my opinion.
You can even reasonably guess someones salary based on their job and location, especially a coworker's.
The same could be said of much private medical information. Guessability, or someone else knowing the information, are not the controlling factors in what is considered private information.
That doesn't mean it's not private. Lots of private information is known by lots of people. Your health record is known by your doctors and the government presumably. Government knows everything about my taxes, my date of birth, national ID (or SSN in US) etc. That doesn't mean it's not a private information. I don't want to share my salary details with other people unless I choose so.
There're plenty of ways to learn of one's SSN or birthday date too - this is still private information, which doesn't concern other people, unless the person explicitly wants to share it.
Most privacy concerns have to do with information that could be harmful in the wrong hands. My web history is useful to me, but if my roommate gets ahold of it, I will be embarrassed to no end. My SSN ensures I can identify myself within America's bureaucracy, but if someone else has it they can open credit cards in my name. My salary lets me make a budget but if someone else knows what my salary is...then what? How does that information harm me when a third party gets it?
- an insurance company demanding a premium because you're well paid
- competitor bidding for your labour anchoring their offer to your current salary
Those are just two cases were it could be harmful.
The idea is to make the information available and transparent while still not making it public and still protecting it.
I'm not a bad actor, who spends all their time figuring out how to make profit off of someone else's private info. I'm pretty sure there're very creative ways private information (salary and not) can be misused, but I don't want to find out by volunteering this information.
> All arguments against salary transparency seem to be that people will be unhappy when they find out that the company has screwed them over and therefore it's better for these people to be ignorant.
Why do you assume someone making less is being "screwed over"? Imagine employees A and B. B greatly outperforms A and therefore rightly makes more. However, A is delusional about his skills and thinks he is as good as B. Pay information is made transparent and A sees he is making less. This makes him mad because by all rights he ought to be making as much as B! This type of comparison/resentment might make A want to quit or ask for a raise, whereas before he was both content and fairly paid at his performance level.
Sounds like the only benefit is keeping A in his delusion, instead of informing him via a competitive market that his skill is not as high as he thought he'd be. Oh, and saving the company money. And making it easier to have private favorites.
If someone is in an executive position, and something like you describe happens, it is their fucking job description to resolve the problem. Meanwhile, by having open salaries, everyone has the information needed for a competitive market. Including college graduates, who get screwed over routinely
//Edit: Oh, and if A ever DOES need to find a new job and advertises his "delusional" skills, either him or his next company will feel the pain from the lack of price information here
Companies not over-paying for their resources is generally a pretty critical factor in them staying solvent and being able to employ people, rather than a nice-to-have.
To put it another way, it's a pretty critical factor in ensuring that more wealth flows into profits rather than salaries and a way to keep sickly companies afloat via the deception of their employees.
Then A is free to do so, but if he's not actually worth more, then he's likely to find out in his job search that he can't command B's salary. WSJ seems oddly unwilling to let the free market resolve this issue.
I really wish this was true, but alas, there are a lot of devs out there who talk a great interview but can't cut it with the real work. They tend to get hired with inflated salaries, screw up the companies systems for a year and then move on when questions start to get asked (but of course, they'll tell themselves the company changed, not that they've messed up). Unfortunately, there are not enough companies out there who can unearth this type of incompetence before hiring.
Sure, that might happen. But you're invoking a potential problem that might happen, when we have problems (gender and racial pay gaps) that are A. more severe than the potential problem you're invoking, B. already demonstrably occurring, and C. potentially correctable via salary transparency. If we can make a step towards correcting existing problems, and the best argument against it is "this might create a less-severe problem at some point in the future", we should probably take that step.
The solution is for the manager to sit down with A and tell him to stop being a brat.
No, seriously. If A is getting upset because he feels he's not paid "fairly", but A isn't contributing enough to get paid more, then someone needs to tell A exactly why he's being paid less. And if you can't explain why, then you need to reconsider that decision very, very carefully.
This doesn't hold. If A is 'greatly outperforming' then a bonus or incentive can be linked to the greater performance leading to a higher pay.
Without measurements how can we can say who is delusional, A or B? Ultimately transparency benefits everyone except those who currently non transparently draw greater wages without justification.
People will adopt their attitudes, there is no place for immaturity and ego in a professional context.
All arguments against salary transparency seem to be that people will be unhappy when they find out that the company has screwed them over and therefore it's better for these people to be ignorant.