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Just recently I read about a case of salary discrimination where a female worker found out that she was paid less than her male counterparts for 19 years. She found out by accident because she was about to retire and a memo was sent to her containing three of her male coworkers’ salaries. She was more senior than most of them and was paid anywhere from 20% to 30% less. This reminded me of one of the companies I worked for because my coworker and I found a list of everyone’s salaries on that company’s shared drive under a folder named Public/Company. If you sorted the list by salary and position it was pretty clear all the women got paid the least in their roles compared to their male counterparts. Additionally, new hires were paid quite a bit more (10 to 20%) than people who have stuck around the company ever since the lean years of 2001 to 2003. When I was leaving the company I made it clear to my manager that I and my cubemate knew this information since it was on a public shared drive where we store our collective files and he was pretty pissed because he found out that a brand new guy a couple levels below him was paid more than him. So he packed up and left soon after me. After we both left nearly everyone in the engineering organization of that company got a raise. It felt like a lot of drama at that time, but I think in the end everyone was better off because the salary information was public (even though it may have been unintentionally public). The people who stuck around got a “market adjustment” and mostly caught up to their new peers, and those of us who left found better opportunities.

So having gone through that incident, I have thought a lot about the pros and cons of public salary information in a corporation. Here are my conclusions:

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1. Companies can’t secretly discriminate against workers if salary information were all public. This will pretty much eliminate lawsuits where employees do find out discriminatory compensation.

2. There is no secrecy between coworkers so there is no speculation as to who is getting paid more, and so everyone can just focus on work. If salaries were posted by position then there wouldn’t be an incident where newcomers with the same positions are paid a lot more just because they joined at a more prosperous time.

3. There would be better accountability for a company as to where their money is going. For example, public companies disclose the pay packages of executives because shareholders like to know the information. Also, the government gives detailed salary information on all positions because they are spending public money. If everyone in a company knew what others were making, then it’s easier to trim the fat when needed.

4. Employees would be more aware of their worth to a company and the career and promotion paths would be more clear. This gives employees direction and something to work towards. In the government they basically state how many years of experience or education you need for a certain pay grade. This makes it easier for people to figure out what they need to do.

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1. Workers may be more complacent in knowing that they will get paid a certain amount as long as they stick around. They may not work to their max potential because they already know what raise and bonuses they would get.  However, I think companies could avoid this complacency by giving out performance based raises and bonuses and clearly state what the rates are for each performance level.

2. Companies would have to shell out a lot more to hire people from competing firms during great economic times because they would have to raise the rates for everyone.  I do think this is a good thing for the employees, but it can be costly for employers.

3. Companies with posted salary information may give  regular but smaller raises and bonuses because they need to make the most amount of people happy.   This is how it is in the government, but it doesn’t have to be always true.

I know that in America people believe that salary information should be confidential, but I really think that open salary information could be beneficial to employees and employers. Since I am Chinese I do discuss salary information with my friends and it is actually very helpful to know what the market rate is for my position.  I think ultimately public salary information has a stabilizing effect in a company because those who are comfortable with what everyone else is being paid are probably happy with what they are being paid.   Since employees often leave companies due to their thoughts about their salary, a company can benefit from workers who are content with their salaries.

What do you think?  Do you work for an agency with public salary information?  Do you wish you worked for one?

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canadian pharmacy cialis soft tabson 05.08.08 at 1:05 pm

I think it would be terrible to have all salary information public. As you allude in your post, the workplace would then become more communist than capitalist.

Rather than quell employees and allow them to “focus on work” I think it would make employees totally preoocupied with everyone else’s pay. Basically annual reviews would have to be public and/or done as a group, since with every pay raise the entire company would want to know “how come she got a 4% raise, and I only got 3%??” or whatever.

To avoid such drama, employers would have to start giving everyone the exact say pay and raises – which in turn would lead to lower productivity and competition (not to mention lower salaries). Plus it would lead to more income volatility and/or less job security since employers would have to either raise everyone’s pay or cut jobs if new hires were really expensive for a few years.

Everyone should be paid based on their value to the company and/or their performance. Yes that means in some markets new hires will be paid more because they are harder to get; yes sometimes the boss is paid less than his highly productive subordinate. This should all be allowed, and making it public would be a disaster.

It might work in China because the culture is more collaborative and collective-minded; but America is very rooted in the “every man for himself” principal.

canadian pharmacy cialis soft tabson 05.08.08 at 1:13 pm

I don’t know. I can see both sides. I know at the state all public salaries were open to everyone to see and it didn’t seem to bother anyone. Though most people who worked at the state weren’t that happy there anyway. :)

I think I’d be curious to know what others were getting paid but there are also so many variables in how people are paid. Perhaps a male in a similar role has different duties or more education so makes more. Maybe he’s been around longer. Maybe he just does a better job.

I try not to let the idea of others making more than me worry me too much. I’m happy with my salary for now and am happy in my position.

canadian pharmacy cialis soft tabson 05.08.08 at 2:06 pm

I had a terrible suspicion that I was underpaid in my last job. I also felt like my contributions weren’t valued. I don’t think those are mutually exclusive.

canadian pharmacy cialis soft tabson 05.08.08 at 3:59 pm

This is my favorite sentence:
“Since I am Chinese I do discuss salary information with my friends…”

Really? I thought you were American?

What does that mean, anyways? It’s like if I said “I’m one eighth German, one eighth Irish, one eighth Guamanian, one eighth English and one half southern redneck. A fourth of me is thinking about getting drunk, and another fourth is thinking about hitting on a married woman. Another fourth is being lazy. Oh, but I talk about wages with my friends some of the time, on the days that I don’t put my truck into 4WD.”

What was my point exactly? Oh yeah, I remember. Public salary information is bad news. It’s bad news because then companies feel like they need to pay everyone the same, which is inefficient. Of course, without open wage information, some people will get paid more or less depending on things as arbitrary as how good they are at negotiating their salary. But that’s the way it goes. After all, this is capitalism in America. If you want to work somewhere where everyone gets paid the same, work at your local DMV or post office. In government you know exactly what your pay will be far into the future. Just try not to blow your head off all over the government gray #42 colored wall.

canadian pharmacy cialis soft tabson 05.08.08 at 4:09 pm

Ian…I thought you knew I’m not American. I’m a Chinese citizen.

canadian pharmacy cialis soft tabson 05.08.08 at 10:24 pm

My current orgnization often remind me of China before 1980. Here everybody knows other people’s salaries and they are often upset or angery because they think some raises for others are not fair. Here raise is more based on “equity” than on performance. I do not think it is a good thing. When you were in China, you were only a child and you did not really know much about what the adults experienced. Every one in your age in China has a happy memory about his or her childhood, because you are the only child. The whole family supplied you with the best they could afford. When you were a child, all the children in China were treated as “little emperors”. Now your generation has grown up and begun to experience what real life is. For all of them, the childhood is their best memory.

canadian pharmacy cialis soft tabson 05.08.08 at 11:05 pm

@laoma: Um…what does my childhood have anything to do with public salary information? Your salary is public information because you work for the government. It is public money and as I said the government publishes the salaries for the sake of accountability. Obviously keeping salaries secret gives rise to secretly discriminatory situations, and there always be grumpy people in any work environment. However, in California people are free to leave their position so if they are unhappy they can leave. I have just stated the pros and cons of the situation. Your comment about my childhood is irrelevant.

canadian pharmacy cialis soft tabson 05.10.08 at 1:02 pm

@Meg:

My experience has been that people know which of their coworkers are the most productive, and don’t begrudge it when those people get paid more. They also know which employees are sliding along, doing just enough to avoid getting fired, and believe that those people should get paid less. So I don’t think you’d see a strong push to equalize everyone’s salary.

What you would see is a lot less of employers taking advantage of employees who don’t know what the fair market value of their labor is.

The only people who benefit from keeping salary information secret are the bosses.

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