Should Salary Information Be Kept Secret?

Should Salary Information Be Kept Secret?

Did you know that salary data for many public-sector employees is available for anyone to see? And I don’t just mean information on groups of employees, nor do I mean rough figures. Databases such as Data Universe allow you to quickly find the actual salary of real people.

If you work in the private sector, you might think it’s a bit strange that this information is just out in the open. After all, in the private sector, salaries are a bit like Fight Club: “The first rule of Fight Club is: you do not talk about Fight Club.”

We don't like to talk about our salary. But is that really what's best for us?

Indeed, that does seem to be a common theme in many private-sector workplaces. Interestingly, I remember a Twitter thread recently which discussed this topic.

The funny thing is, I made the point that I often worry about discussing salary numbers. Why is that? Usually, it’s because I don’t want my co-workers to resent me if I happen to make more than them. Several points were made in rebuttal, which I appreciated because I always like to expand my perspective.

This response to my concern really got me thinking:

I think Emilie is absolutely right. It’s important to be certain that a level playing field is maintained.

Another point that was made is that if someone dislikes me because I earn more than them, that person probably isn’t worth my time. Granted, what each person earns is complex and perhaps even subjective, but it’s still a valid point.

If we can assume that salary is based on performance, then that person should have no reason to take issue with me. Yes, I realize that isn’t always the case. But everything else could be well outside my control.

Keeping Salary Information Under Wraps

But what is the reason for intentionally keeping salary numbers a secret, anyway? Is it to protect employees? That’s a nice thought, but the truth is that it’s probably not correct. Consider this quote from an article from The Cut:

As a former employer once told me when I asked for a raise to match my co-worker’s pay: “This is why I don’t like you talking to each other about how much you make.”

If that is what a manager actually said, then I feel that is, in a nutshell, the reason for keeping salary information under wraps. It’s not so much about protecting employees. It’s more about enabling employers to continue their unethical behavior.

If you know that several of your co-workers make much more than you, then you are probably more likely to say something. If not? Well, then you are more likely to subsist in blissful ignorance.

State Regulation

Another thing worth noting from the article above is that some states are actually implementing new regulations. The one it mentions, specifically, is New York. The gist of it is that, if an employee asks about salary information, his or her employer cannot deny the request.

I think this is a good thing in general, although I must admit I’m a bit on the fence about it. On the one hand, it’s good that we are seeing a move toward increased transparency; on the other, I’m not sure state regulation is the answer.

And no, I am not thinking there should be federal regulation. I’m going in the other direction, which is to say I think each organization should have more control in deciding whether be more transparent. I do realize that without state regulation, many employers or even most would stick to their old ways. In that sense I certainly understand the move for state regulation; I just think employers should have some say in it.

I’m not sure what the answer to this is at this exact moment, but it is certainly worth mentioning.

Employee Performance

Coming back to the above-linked article from The Cut, it turns out that there is yet another downside to keeping salaries a secret. Doing so can actually have a negative impact on employee performance.

I do see one issue with that claim, though: employee performance is difficult to quantify. That said, the article does provide a reference to a study which suggests that teams work more effectively together when salaries are not being kept secret.

Some studies suggest that salary transparency helps teams work together more effectively.
Some studies suggest that salary transparency helps teams work together more effectively.

In my mind, that actually makes a lot of sense. If you are constantly wondering how much your teammates make, that can not only make you distracted but could even make you trust them less.

It’s easy to see why those issues would make teams work less effectively together, isn’t it?

Income Inequality

I want to come back to the idea of income inequality because there are actually at least a couple of different aspects to it.

That inequality could come in a few different forms: in the form of discrimination against certain groups, for example. It could also come in the form of intentionally paying someone less, not necessarily due to discrimination, but because you can. You can do so because that person is oblivious to the salaries of similar employees, so they may not counter what is offered.

I think many of us would like to earn more; I’ve written before about how earning more might be the key to your success. But your income should be determined by factors such as your performance and market rates, not by your background.

Related: Frugal Living Isn’t Everything – Here’s Why

An interesting questions is how lack of salary transparency affects minority groups.
An interesting question is how lack of salary transparency affects minority groups.

Though I am not often subject to discrimination myself, I do feel the second point above is one that has affected me. Several years ago I started a new job, and my pay was pretty low. Needless to say, I didn’t feel great about it. But still being relatively early in my career, I didn’t feel as though I had very much negotiating power. Not long after starting the job though, I remember my co-workers saying that this was a different HR rep setting my salary than they had and that this new guy “screwed people.”

As you can see, this was bound to be a tough situation for me, even if I had been more informed. I didn’t really have anything by way of savings, and I had even less experience. Thus, I did feel like I had to pull the trigger quickly.

Still, someone who is more experienced coming into such a position should be able to make an informed decision.

Not All Sunshine and Rainbows

As is usually the case with any solution to a perceived problem, wage transparency would likely not be perfect.

Scott Rick, a marketing professor at the University of Michigan, conducted a study that revealed some interesting findings. The short version is that not only did those who found out they were on the low end of the pay scale tend to perform worse; they were also more prone to behavior such as cheating on exams.

The above article also mentions other potential issues. For example, pay transparency may not include things such as benefits. Benefits are sometimes more difficult to define on a dollars-and-cents basis. Other times they are received after the employee’s compensation is initially determined.

Whatever the case may be, my personal take on this is that transparency might work better at a startup than a long-established company. My reason for thinking so is because employees at older organizations may have had the same position for years, or even decades; that wouldn’t be the case at a startup.

There Are No Perfect Solutions

Yep, life is messy sometimes. Unless you’re an adult, and then it’s messy approximately 100% of the time. Still, I do believe there are ways to address the issue of salary secrecy.

At older, more established companies, I do believe that introducing this change probably needs to be more gradual. Perhaps employees could be more willing to discuss real numbers amongst themselves.

I think it’s important to consider the reason this information is kept secret. Unless you have a very specific answer, there is at least a possibility that the reason is not to protect you. Instead, it may be to protect someone “above your pay grade,” as they say.

So even though releasing the exact salary for every single employee may not be ideal, at least not immediately, it’s something to think about. I would say we need to start opening the conversation. The transition might need to be a gradual one, but I do believe that moving toward more openness would be better for employees in the long run.

Those above my pay grade may not agree, but hey – maybe that’s why they’re above my pay grade.

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This Post Has 19 Comments

  1. Thought provoking. I think people don’t like to discuss their salary as you mentioned for fear of making more than there co-workers and being resented.

    There are some obvious reasons why someone would make more, years at company/experience, productivity, behavior, etc. Hard to do an exact apples to apples comparison between two workers doing the same job.

    Not sure I want big brother government to mandate disclosures though. Interesting to see what happens with New York as a guinea pig.

    1. I agree on that, I think. I believe a more gradual cultural shift is a better way to go about things. Suddenly being required by the government to disclose it could get really messy really quickly.

  2. My stepmom is a superintendent in a school district here in the south that is a poorer district. She is also the first female superintendent in this district, she has done more for this district than any man before, and that is not me boasting her performance, the awards and records for the schools have proven that. However, every year the newspaper puts her salary in the paper as a “…the public needs to know article…” I have never been a fan of that. She also has several old school men on the board that have fought her tooth and nail the entire way and honestly it is because she is a woman (again words we know are facts). These men have literally sabotaged her getting increases and more because, again, she is a woman (I cannot make this up). Although she does extremely well, the previous supers got way more having done way less. I am saying this bc it is sad that a) salaries for state employees are out there for everyone to see at any time and b) the inequality that my stepmom (and I know other women in power) receive is mind boggling- and a lot here is just old school mentality that women cannot and should not make more than a man. Regardless of her education (she has her PhD which her predecessors did not and still made more). Ugh I could go on forever about this bc it is truly backwards here. But great article and some really good points!!

    1. Yeah, that is certainly not the right way to handle it. Sorry to hear that and I really hope we can start to do better. That was kind of the idea here. As I said, I know adult life is never perfect but that doesn’t mean we can’t make improvements!

  3. I used to work for my local county government and salaries are available to the public because it is the public’s money. It created a lot of problems between the employees though. There always seems to be that one person that thinks he/she should make more even though performance levels, responsibility levels and seniority are completely different.

    Great post! Sharing all over Pinterest!

    1. I can see that. I definitely don’t have all the answers, but I there is a valuable discussion here.

      Also, I haven’t had time to make a proper pin for this post yet although I am still hoping to. But thanks for sharing nonetheless. 🙂

  4. I was always told discussing salary is a taboo subject because of creating jealousy among co-workers and others in my life, such as family and friends. As a teacher, my salary can be easily found online as long as you know my education level and years of teaching. Although I don’t worry about discussing salary with those making similar money, I do take caution when it comes to those I know do not make what I do. For instance, I have a wonderful paraeducator that works with me, and I know that she doesn’t even make half the money I do. Yes, she could go back to school and become a teacher (which she would be great at), and thus reach the same level of pay. However, I’ve found that people often don’t consider the work and effort you’ve put in to getting where you are, and still remain jealous even though they could attain the same status themselves. I completely understand for those that are unable to move forward for whatever reason, but even for those that can the money discrepancy can create problems if it’s out in the open. I guess what I’m trying to say is that even when you’ve clearly put in more time and work into your career, and others could do the same but haven’t, all they see is the money difference.

    1. Thanks for sharing. I agree, there is probably not any one solution that will work universally!

  5. Great article. While I don’t personally talk about salary, I think people should be able to share it or keep it secret if they want too; at least in the private sector.
    Years ago, when I first started my job, I was told by human resources that it was not appropriate to discuss salary. The reason they gave, of course, is that other employees may get jealous. I knew that was bs from the moment I heard it. If they wanted to keep people from being jealous, they would pay everyone the same based on their experience and talent. But, they want to pay you the least amount possible to keep you happy.

  6. Hi Bob,

    Like you I lean towards being transparent about salary. Keeping salary information under wraps most benefits management.

    Every organization operates in a pyramid structure whether or not hierarchy is “flat”. People at the top earn a lot more than people at the base. People at the bottom or in between do not earn the same amount, and their pay ought to be based on their performance. Which leads to a management topic, right?

    How do we quantify performance? Well, I believe peer reviews or 360 reviews can help to solve the issue of quantifying performance.

    I used to work in a restaurant in London that had the greatest visibility in terms of salary. Each employment tier for example all service staff have the same base salary, and management staff are on another level of base salary. Regardless, each person had a variable portion of their salary that is based on performance. All of the variable salaries come from a pool that are two thirds of the service charge collected each month. The last third goes to cover breakages and other expenses.

    Management, immediate leaders, customers, and staff themselves review their own performance and the performance of others that they work with. These reviews are based out of point systems which help management to work out the salary of every staff at the end of each month. Sounds like a lot of work? For sure, yes. But was every staff happy? Tremendously. First of all, because the basic salary was pretty basic, everyone wanted a larger portion of variable salary. How could anyone increase their portion of variable salary? By (a) making sure the restaurant did super well month after month, and (b) by improving individual performance and relationships with one another. You’ll have to agree this is a brilliant system. Everyone wanted to do super well, salaries were transparent and the salary system itself weeded out people who were assholes or not efficient, but mostly assholes. For folks who were inexperienced or unskilled but NICE, the rest of the team would help these people grow.

    Like what Emilie pointed out, keeping salaries under wraps do not help groups who are discriminated. It’s so true. A lot more people are discriminated than we think. Women, the young, the old, different skin color, different gender preferences even. Every headcount has a budget tied to it. Why should corporations pay more when they can pay less? If I am the hiring manager and I can look good by saving money for the company by negotiating a lower starting pay, I would! This is what happens most of the time and it sounded like what happened to you. It happened to me too when I switched from a background in food service to a corporate environment. I accepted a 20% paycut because I felt that (a) it’s a chance they’re giving me to get out of food service, (b) I was a greenhorn and had to learn the ropes and (c) I felt grateful to the management for giving this a greenhorn a chance. You heard right. I think this happens to most of us. Which is why Glassdoor is so good because it helps us better understand market rates versus the rates of a particular company.

    I really hope every company can have a form of what we had in the restaurant in London. But I’m a realist.

    Connie
    http://www.sassy.mom

    1. Wow, Connie! Thanks so much for sharing.

      That’s very cool that transparency worked so well at the restaurant. And even motivated people to work harder! I think that is the ideal situation here. I hope other organizations can follow suit – and, of course, eliminate a lot of the inequalities there are with salaries.

  7. Great article and some thought-provoking points but… I still feel that my salary is my salary. No one else needs to know what it is. I work in the private sector in finance, male-dominated. Regarding senior management, of course the people at the top are going to earn more – that is what we would want if we were to make it to the top too! I still feel I don’t need to know what others are on. My salary is a reflection of my effort, time and results. I don’t feel as though it is my place to judge who should be paid what – the person who looks like they take it easy in the office may work ’til 2am at home every night. Knowing each others salary just causes unnecessary competition and frustrations in my experience.

    Sarah
    dukesavenue.com

    1. Thanks for your comment, Sarah! That is a valid concern for sure. I can see how that would be less than ideal.

      That’s why I am encouraging this discussion, because I am still trying to figure out the best way to prevent pay inequality. I don’t think that posting all salary info for all private companies is the answer. I guess I’m still mulling that one over.

  8. Ohhh this is quite the topic! I don’t like sharing what I make as well, however, I kind of think it’s important as well. One of my ex-co-workers we’re talking about how much they made and one was making more than me when she started. Even though I had worked for my manager for years, and had more experience and responsibilities. Honestly, I was being used, since my manager knew I would do anything he asked and it was easy for him to push me around. I didn’t even get a raise after confronting him either. I feel some managers may take advantage of hard workers and therefore I think it’s important to discuss these things sometimes. It’s not that I was jealous of her, it just made me upset knowing that someone who was new, and didn’t have as much experience or responsibilities as me was making more. Instead of arguing about it though, I just left and decided to find a different job where I was more appreciated.

    1. Great point, Janita! If you are being paid you need to know about it so you can take action! That’s the bottom line here I think.

  9. Yeah, this is definitely one of those toughies lol (did i just make up a word)

    While i do get that employers actually gain the most by salaries being kept secret, theres just something about the idea of sharing exact salary numbers with coworkers. IDK, almost like i feel like if i make more, that would offend them… and BECAUSE of me, that may lead to a hostile work environment,

    Or if i make less, not only would that piss me off…. maybe it would make them uncomfortable.

    Do we really want the government involved in this to any capacity? Lol… sounds ugly to me

    1. Hah, I’ve definitely heard toughies before. 🙂 And yeah, that’s exactly my issue with it as well. I guess the bottom line though is I don’t think people should make less than those with similar qualifications, in similar positions, just because they’re being kept in the dark. If that makes sense.

  10. The culture seems to be shifting regarding sharing salaries. More companies are making this information available. I can see both sides of this issue. Your point about measuring performance is a tough one. Higher performers should be paid more even if they are doing a similar job. If you have a software developer who is twice as productive as a co-worker they should absolutely make more money. However, there aren’t always quantifiable metrics to demonstrate differences in performance. I think you did a nice job hitting on points from both sides.

    1. Yeah, for sure. It’s complicated. There’s no easy solution, but paying people less “because you can” is a problem!

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