In general, people in the US do not publicly share their salary information with each other. But this lack of transparency may be one of the reasons there are startling differences between people doing roughly the same job with similar skills. The instinct toward secrecy is further encouraged by companies who don’t want employees to share salary info so that they can continue saving money by negotiating smaller salaries.
All of that can be fought back against by publicly sharing salaries, and there are some other benefits that come with that.
New hires are often paid less and don’t know it
New hires often don’t know what they are truly worth. Particularly workers at the start of their careers. Desperate to get a job and begin a new career, they might not have negotiated a salary commensurate with their position. If they don’t compare salaries and rely on average raises and never leave their job, over the length of an average career one study finds that they could leave as much as 50% of their earnings potential on the table.
But by comparing salary information with others, a worker can find out if they’re being underpaid for their position. That can lead to a realization they can negotiate for a larger raise or indicate that they need to begin looking for a new job, where they will negotiate a larger salary starting point. If they compare salaries and find out they’re being paid fairly, it could also lead to peace of mind.
Women are paid less than men, and might not know it until they compare salaries with a male colleague
Women today make, on average, about 81% of what men make. It has risen from the past from 62%, but still has a long way to go before it matches up.
That means a woman might not know if she’s working at a company that is paying her even less than that 81% until she starts comparing salaries.
Read: Women Still Don’t Make as Much Money as Men
Minorities are paid less
According to a recent Pew Research document white households have, on average, 13 times the wealth of non-white households. And that has grown since 2007. That’s a tremendous prosperity gap. Part of that comes from unequal pay. The Federal Reserve notes that the median income of minorities fell 9% in the three years between 2010 and 2013.
Without comparing salaries workers might not know that hiring and pay decisions at a company are being influenced by bias, particularly as individuals biased against minorities don’t always declare it. The Harvard Implicit Bias study shows a great deal of bias is not even realized by people exerting it. Without comparing pay a minority career person might not realize upper management lowballed their salary.
CEOs who have their salaries made public earn more
Since CEO pay become public, CEO salaries have risen incredibly. Why? One reason is that a CEO can look across at another company and see exactly what those other CEOs make. If one single CEO gets an amazing pay package, the rest of them can see it and begin to negotiate for it.
The average CEO in the 60s made 20 times what their average workers made. Today that figure is almost 300 times. That growth exploded in the late 1980s, and some argue that a lot of it comes from the fact that companies began to be required to post CEO salaries publicly in order to make public companies accountable to their shareholders.
Interestingly, CEOs of private companies make on average less than CEOs of publicly held companies.
Maybe average salary earners should take a lesson from their better-paid CEOs?
There’s an entire country where everyone knows everyone else’s salary
In Norway the average salary is higher than almost anywhere else in the world. And yet everyone’s taxes in Norway are posted by the government in an online searchable database. It sounds very strange to people in countries who are secretive about salaries, yet it hasn’t hurt Norway’s ability to earn money in the slightest.
While passing legislation to make tax returns public would not go over well in the privacy loving USA, sharing salary information can better help us educate each other about what we are making, what we should be making and help reduce unfair pay discrepancies. For those who don’t feel comfortable talking about salary, sites like Glass Door can help us research what pay rates are normal and let us anonymously share information to much the same effect.
Sources:
Tax Returns in Norway are Public – Joshua Kennon
Norway World Salaries – World Salaries
To fight income inequality, tell your friends how much you make – Quartz.com
Wealth inequality has widened along racial, ethnic lines since end of Great Recession – Pew Research
How CEOs became so obscenely high paid – Pandodaily