5 ms·

With salary transparency, wouldn’t everyone be paid less? (Not a challenge, just a curiosity.)

toomuchtodo 8y ago
I'd argue everyone gets paid more, as lower paid staff will churn more rapidly for higher paying positions, and in a tight labor market pay must rise to attract talent to roles. With that said, you should always be interviewing for your next role, as you will never get a salary bump at an annual review near what you would make switching jobs. Always Be Interviewing. You are looking out for you first.
tdb7893 8y ago
Why would you say that? I figured it would give employees more power in salary negotiations so I figured the salary would go up mostly.
- TomMarius 8y ago
  Because in most cases there are some or even many people who are available to work for less. The management then would argue that "you can't earn more than they do for the same work, everyone would have to get a raise but there is no justification for that". Secrecy makes it an individual discussion as a by-product.
  - yholio 8y ago
    In either case, managers would not entertain talk about a raise unless there ware actually not that many people willing to do the same work for less. So a secret negotiation allows them to hide that information from the rest of the workers and only compensate those aware of their market worth. An open negotiation would not lower compensation for the latter since they can always just quit, it would raise salaries for the less informed.
    - sokoloff 8y ago
      It would make the currently less informed more informed about this topic. It’s not clear whether that would lead to them negotiating for more money.
- pc86 8y ago
  If salaries are completely transparent, including external to the company, salary negotiation will all but disappear. You'll apply for a senior developer job, see that all the senior developers there make $95k (or whatever), and you're either okay with or you're not. The flipside, which is largely why I am not in favor of legally enforced salary transparency, is that you ask for the salary range, they say $90-100k (or whatever), and you can justify why you should get 100 or 105 or 110 with examples. Or you can ask for $90k because you're happy with that and know you won't price yourself out of the position, or any number of other possibilities. It just makes the entire process much less flexible, which I know a lot of us developers love, but in the business world it doesn't make much sense.
  - setr 8y ago
    The problem is that the information asymmetry implies that you might be worth 95k in the market, but you're much less likely to know that than the company making the offer, and accept 80k not realizing you've lost out on 15k. It gets further against you if they do things like asking your previous pay. In general, you would expect salary negotiation to be worse for any given employee, because they have limited tools to research with compared to the hiring company, and far more limited (man) hours to do that research. I would also imagine negotiation still exists, but now more emphasized on the extra benefits, eg PDOs, medical plans, bonuses, etc. And ofc the added negative that the company can hide unfair practices, eg underpaying particular groups, or hiring someone's kid for 2x the pay, or whatever. The main negative is that someone who was skilled at salary negotiations now makes less, but presumably most people aren't skilled, making it more a net positive. The biggest concern tbh is if the whole industry was overpaying its workers due to the fog of war, and this suddenly cleared things up, and employees across the board take a hit
  - whatshisface 8y ago
    >You'll apply for a senior developer job, see that all the senior developers there make $95k (or whatever), and you're either okay with or you're not. But then one senior developer would claim that they are better or different than every other senior developer, and negotiation would return. Sure, Tim might be willing to accept the average rate of $95, but Jim worked as a staff engineer at Google, and so on.
- anonacct37 8y ago
  We do have a couple examples of companies that are transparent with salaries or comp plans (Buffer, Gitlab, even places like Basecamp). Nowhere with open published comp numbers has ever come close to my comp. Maybe it would work better as a system if everyone was opted in but the current data points I see don't support higher salaries for people with my skillset.
yholio 8y ago
Salary transparency already exists, just that it works one way only: the employer knows everyone's salary and they thoroughly research the salaries paid by their competitors. As a general economic principle, I can't really see any situation where this information asymmetry works to the benefit of the workers. It might benefit some employees in critical positions that can bridge the information gap and gain an advantage over their peers. But on average, no, transparency reduces the leverage of the employer; else they wouldn't fight to maintain that information differential, they would promote full transparency in order to pay everyone less as you say.
- whatshisface 8y ago
  >they thoroughly research the salaries paid by their competitors How do they go about this? Through means accessible to individuals?
  - yanslookup 8y ago
    Check out imercer.com. Depending on how you look at it it may start to look like a a middleman for cartels.
  - yholio 8y ago
    There are market research firms that specialize in this area. It's useful to have such information, so it has monetary value - money presumably saved by underpaying or avoiding overpaying your workers. It's not something the average employee would afford in money and effort to research. It's a good question how the data is obtained. Maybe through mutual data sharing agreements in exchange for access? Anyway, I've see such reports for my country, with very detailed breakdowns for job types, seniority, broad technology area, forecasts etc.
  - GlickWick 8y ago
    Think about all the times you've told a recruiter/hiring manager your previous salary (don't, btw). Think about the HR teams and such at your company that have access. Shrewd people can get this data, especially if they're willing to pay for it.
sjjshzvuiajhz 8y ago
It’s complicated. Keeping salaries secret no doubt makes it more tenable to pay people who sit next to one another vastly different amounts. In a knowledge worker job where some people are way more productive than others, plus the same person’s productivity is highly variable over time, it’s probably good to pay people very different amounts of money over time, and also to have a complicated system of stock/bonus/promotions to incentivize better performance. But companies aren’t just trying to maximize performance, they are also trying to minimize pay. It’s a lot easier to give someone a 20% raise if the starting salary is 50% lower. Some people are underpaid because they don’t know how much they are worth, especially people from backgrounds where nobody makes this much money. Some people are overpaid because they are friends with the boss. If a company is capable of paying $200k on average, salary transparency may make it harder for them to recruit people who are worth $500k. I’m paid a lot more than any company with a salary transparency calculator I’ve seen pays someone with my job title and experience. So I’m not going to try to work for those companies. I get the impression they are underpaying their employees, but their salary transparency allows them to recruit people who used to be even more underpaid.

I'd argue everyone gets paid more, as lower paid staff will churn more rapidly for higher paying positions, and in a tight labor market pay must rise to attract talent to roles. With that said, you should always be interviewing for your next role, as you will never get a salary bump at an annual review near what you would make switching jobs. Always Be Interviewing. You are looking out for you first.

tdb7893 8y ago

Why would you say that? I figured it would give employees more power in salary negotiations so I figured the salary would go up mostly.

TomMarius 8y ago
Because in most cases there are some or even many people who are available to work for less. The management then would argue that "you can't earn more than they do for the same work, everyone would have to get a raise but there is no justification for that". Secrecy makes it an individual discussion as a by-product.
- yholio 8y ago
  In either case, managers would not entertain talk about a raise unless there ware actually not that many people willing to do the same work for less. So a secret negotiation allows them to hide that information from the rest of the workers and only compensate those aware of their market worth. An open negotiation would not lower compensation for the latter since they can always just quit, it would raise salaries for the less informed.
  - sokoloff 8y ago
    It would make the currently less informed more informed about this topic. It’s not clear whether that would lead to them negotiating for more money.
pc86 8y ago
If salaries are completely transparent, including external to the company, salary negotiation will all but disappear. You'll apply for a senior developer job, see that all the senior developers there make $95k (or whatever), and you're either okay with or you're not. The flipside, which is largely why I am not in favor of legally enforced salary transparency, is that you ask for the salary range, they say $90-100k (or whatever), and you can justify why you should get 100 or 105 or 110 with examples. Or you can ask for $90k because you're happy with that and know you won't price yourself out of the position, or any number of other possibilities. It just makes the entire process much less flexible, which I know a lot of us developers love, but in the business world it doesn't make much sense.
- setr 8y ago
  The problem is that the information asymmetry implies that you might be worth 95k in the market, but you're much less likely to know that than the company making the offer, and accept 80k not realizing you've lost out on 15k. It gets further against you if they do things like asking your previous pay. In general, you would expect salary negotiation to be worse for any given employee, because they have limited tools to research with compared to the hiring company, and far more limited (man) hours to do that research. I would also imagine negotiation still exists, but now more emphasized on the extra benefits, eg PDOs, medical plans, bonuses, etc. And ofc the added negative that the company can hide unfair practices, eg underpaying particular groups, or hiring someone's kid for 2x the pay, or whatever. The main negative is that someone who was skilled at salary negotiations now makes less, but presumably most people aren't skilled, making it more a net positive. The biggest concern tbh is if the whole industry was overpaying its workers due to the fog of war, and this suddenly cleared things up, and employees across the board take a hit
- whatshisface 8y ago
  >You'll apply for a senior developer job, see that all the senior developers there make $95k (or whatever), and you're either okay with or you're not. But then one senior developer would claim that they are better or different than every other senior developer, and negotiation would return. Sure, Tim might be willing to accept the average rate of $95, but Jim worked as a staff engineer at Google, and so on.
anonacct37 8y ago
We do have a couple examples of companies that are transparent with salaries or comp plans (Buffer, Gitlab, even places like Basecamp). Nowhere with open published comp numbers has ever come close to my comp. Maybe it would work better as a system if everyone was opted in but the current data points I see don't support higher salaries for people with my skillset.

yholio 8y ago

Salary transparency already exists, just that it works one way only: the employer knows everyone's salary and they thoroughly research the salaries paid by their competitors. As a general economic principle, I can't really see any situation where this information asymmetry works to the benefit of the workers. It might benefit some employees in critical positions that can bridge the information gap and gain an advantage over their peers. But on average, no, transparency reduces the leverage of the employer; else they wouldn't fight to maintain that information differential, they would promote full transparency in order to pay everyone less as you say.

whatshisface 8y ago
>they thoroughly research the salaries paid by their competitors How do they go about this? Through means accessible to individuals?
- yanslookup 8y ago
  Check out imercer.com. Depending on how you look at it it may start to look like a a middleman for cartels.
- yholio 8y ago
  There are market research firms that specialize in this area. It's useful to have such information, so it has monetary value - money presumably saved by underpaying or avoiding overpaying your workers. It's not something the average employee would afford in money and effort to research. It's a good question how the data is obtained. Maybe through mutual data sharing agreements in exchange for access? Anyway, I've see such reports for my country, with very detailed breakdowns for job types, seniority, broad technology area, forecasts etc.
- GlickWick 8y ago
  Think about all the times you've told a recruiter/hiring manager your previous salary (don't, btw). Think about the HR teams and such at your company that have access. Shrewd people can get this data, especially if they're willing to pay for it.

sjjshzvuiajhz 8y ago

It’s complicated. Keeping salaries secret no doubt makes it more tenable to pay people who sit next to one another vastly different amounts. In a knowledge worker job where some people are way more productive than others, plus the same person’s productivity is highly variable over time, it’s probably good to pay people very different amounts of money over time, and also to have a complicated system of stock/bonus/promotions to incentivize better performance. But companies aren’t just trying to maximize performance, they are also trying to minimize pay. It’s a lot easier to give someone a 20% raise if the starting salary is 50% lower. Some people are underpaid because they don’t know how much they are worth, especially people from backgrounds where nobody makes this much money. Some people are overpaid because they are friends with the boss. If a company is capable of paying $200k on average, salary transparency may make it harder for them to recruit people who are worth $500k. I’m paid a lot more than any company with a salary transparency calculator I’ve seen pays someone with my job title and experience. So I’m not going to try to work for those companies. I get the impression they are underpaying their employees, but their salary transparency allows them to recruit people who used to be even more underpaid.