May 16, 2014

Is Salary Transparency a Good Idea?

According to Glassdoor, the median salary for a writer in the U.S. is $50,000. I make nowhere near that amount.

Not that I’m bitter about it, or feel that I should be making that much. I’m pretty new to the game,  and the “writer” category is a big one. If we break it down into subsets, we see a wide, wide range of average salaries: reporters make about $43,650 on average, whereas movie writers rake in significantly more, with an average salary of $106,160. And these are just the national averages: if you start sorting the data according to both role and location, you’ll see even more variation. For example, the average reporter in Nebraska makes almost half the national average salary.

I like knowing these things. I like being able to measure my own earnings against the average. I like being able to know what I can realistically expect if I choose to keep writing. It’s empowering to have these numbers as tools.

I’m not alone in this: The Atlantic points out that 60 percent of employees would like more information about what constitutes fair pay — e.g., they want to know whether or not their compensation is up to par.

Despite employee demand, most companies are purposely obtuse when it comes to salaries. Random worker X generally can’t drop by HR to find out what random worker Y is being paid. Some organizations even go as far as to prohibit employees from discussing their salaries with anyone outside of the company.

Even so, the National Labor Relations Act allows employees to share salary information with one another, but workers so rarely take advantage of this. By law, company policy allows such discussions, but the cultural norm, when it comes to paychecks, is sort of “don’t ask, don’t tell” (not that I’d compare salary conversations to discrimination against gay and lesbian soldiers in the military — merely pointing out a parallel).

I bring up all of this to pose a question: is our current way of handling salaries at best foolish and at worst detrimental? Is it time for more transparency?

The Good Thing about Salary Transparency

I said earlier that I like having access to information about average salaries because it helps me determine the fairness of my own salary. This is perhaps the most immediately obvious benefit of transparent salaries: it’s much easier to determine what constitutes fair pay – and how your salary stacks up – when you know what other people are making. Otherwise, you’d have little but your gut to go on, and no manager is going to approve a raise just because you feel like you should get one. If you have data to back up your feeling, though, you can make a much more valid argument.

Up until now, I’ve been speaking in generalities – national averages, regional averages, etc. But salary transparency can also help out employees at a small scale. If a company adopts a policy of salary transparency, employees will also be able to determine the fairness of their salary against what other people at a specific company are being paid. National averages are helpful, but company averages are even better: it’s one thing if the small company I’m working for can’t afford to pay me as much as other writers are being paid. It’s a totally different – and much more egregious – if I find out that my small company pays other writers with comparable workloads much, much more than they pay me.

Knowing a company’s salary can also help us root out discriminatory practices – e.g., are women and people of color being paid less than their white, male peers? Consider the recent case of Jill Abramson, who was fired from her position as executive editor of the New York Times after she discovered that her pay and pension benefits were far less than the pay and pension benefits of Bill Keller, the man whom she succeeded. Some allege that Abramson was fired as a direct result of her attempts to right this wrong; others say it was far more complicated than that, and that Abramson’s pay and benefits were directly comparable to Keller’s.

I won’t venture to appoint myself arbiter of the situation, but I will say this: in a company with fully transparent salaries, this whole debacle may have been avoidable. Take Buffer, for example, which recently went fully transparent with its salaries. Buffer even went as far as to publicize the formulas it uses to determine wages, which means that employees who discover a fishy gap can do the math to figure out whether or not the disparity should exist. If there was a gap between Abramson’s and Keller’s pays, it would have been easy to determine the validity of said gap in such a transparent environment. And if the gap were found unfair, the Times would have a hard time justifying it – after all, the company’s own formulas would provide the damning evidence.

Salary transparency also leads to higher productivity and more efficient workforces. Researcher Emiliano Huet-Vaughn of UC Berkeley found that workers who had access to salary information were up to 10 percent more productive than workers who did not have access to such data. Transparency, it seems, guarantees fairness and fosters trust between an employee and their employer. When the employee trusts the employer, the employee is going to feel more invested in the workplace – hence, higher productivity.

Of Course, There Are Some Problems

Nothing is ever black and white, and salary transparency has its share of detractors.

In polite society, it’s often considered gauche to discuss salaries. Feelings can get hurt. If you discover that your friend makes double your salary, you may very well feel embarrassed. If he flaunts his relative wealth, that’s just salt in the wound. Worse, he may start feeling like he needs to help you out – paying for meals, slipping you gas money, etc. Have you ever received unwanted charity from a friend or relative? It’s fairly degrading.

Issues of fairness aside, people in the same organization are compensated very differently, depending on what they do. With salary transparency, that fact will be obvious to all. Do you really want the people in sales knowing that you, the entry-level assistant, can’t afford to head out to lunch with them every day? Again: such a situation can be degrading and disheartening, no matter how much you enjoy your job or how fairly calculated your salary is.

Some organizations may be worried about employee reactions to salary transparency. However, I’d hardly call this a problem: if you’re worried that employees wouldn’t be happy about their salaries, then you should probably reevaluate your pay scale immediately. Chances are, your company is being at least a little shady.

The Verdict? 

Here’s the thing – aside from the potential social sting of salary transparency, there really aren’t any downsides. And so we have to ask ourselves: is adjusting to the discomfort worth the rise in productivity and the guarantee of fairness?

I think of it this way: if you enjoy your job, you should want the company to be as productive as possible. If salary transparency can help with this, we should put the good of the group ahead of our individual concerns about embarrassment. Similarly, we have the option of being blissfully ignorant about our salaries, or we can choose to face reality. We may find that we’re not being paid fairly, and salary transparency can help us correct this. I’d rather know that my salary was fair than avoid the question out of some sense of propriety.

So, I’m all for salary transparency. What about you?

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Matthew Kosinski is the managing editor of