Why Salary Transparency Is Actually Better For The Company

by Megan Grant

In the workplace, it's long been considered not only a faux pas to discuss pay with coworkers, but an actual breach of contract. Upon accepting a job, many of us have agreed in writing not to have conversations about paychecks with our cubicle neighbors; but more frequently, research is finding that salary transparency is better for employees, and for a number of reasons, actually.

One such study was conducted by Elena Gitter, an assistant professor at Cornell University, and Peter Bamberger, of Tel Aviv University. Together, they found a relationship between employee collaboration and pay transparency, suggesting that when salary is transparent, employees work together more efficiently. Why? Because when workers know how much people earn, they become better at asking the right people for help.

That's not all, though. In yet another study with over 2,000 subjects by Emiliano Huet-Vaughn — an assistant professor at Middlebury College — researchers found that pay transparency also improves performance: participants worked harder and more productively when they were able to compare their pay with other people's pay.

While it's a complicated (and sensitive) discussion, the takeaway is pretty clear, and honestly, not all that surprising: Pay secrecy hurts worker performance. Pay transparency improves it.

Pay transparency has become more hotly debated lately, as our feminist friends continue to fight for equal pay for equal work. Pay secrecy makes this a huge problem for us: when you forbid us to discuss pay with our coworkers, you create an environment where it's so much easier to discriminate based on gender (and race). We can't fight what we can't see, which would explain some employers' desire to keep paychecks a secret, and thus, female employees quiet. The real problem here, then, remains inequality in the workplace.

To that end, more states are taking steps to close the gender pay gap and make discussions about pay fair game, changing the climate of how we discuss income. Over the last few years, states including California, Connecticut, New York, and Oregon have put gender pay equality measures in place. Even more states have been discussing such legislation, with pay secrecy slowly becoming a thing of the past.

That's not the only thing states are doing to try to close the gender wage gap. Recently, the salary history question — when a potential employer asks you how much you made at a previous job — has been banned in states around the country.

New York is one such state that has banned it; and at least 20 more have joined in. This common interview question remains a huge problem because whatever number you give sets the standard for what that potential employer thinks they need to pay you. If you tell a business owner that your last job paid you $40,000 a year, do you think they will feel inclined to offer you more? Probably not — even if you're more qualified than you once were, or if you were actually grossly underpaid before. It's yet another manipulative tactic that is so commonplace that we didn't really question it. But when you think about it... why should an potential employer care what you used to make?

We can demand equal pay all we want; but until we eliminate the environment that has enabled employers to pay certain people less based on their gender or race, pay inequality will continue to be a problem. Salary discussions need to be less taboo, workplaces need to foster more openness, and the gross discrepancies in pay that we've always played along with finally need to be brought to light.

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