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There have been a few studies on the systemic effects of wage transparency with respect to average pay. They tend to indicate, as in this paper [0] from 2021 fo

There have been a few studies on the systemic effects of wage transparency with respect to average pay. They tend to indicate, as in this paper [0] from 2021 for example, that wage transparency suppresses average wages over time. The proposed mechanisms for the wage suppressing effects seem eminently plausible. I haven't seen much evidence that it would increase average wages, either anecdotally or in studies. [0] https://www.nber.org/system/files/working_papers/w28903/w28903.pdf https://www.nber.org/system/files/working_papers/w28903/w289...

Zetice 3y ago
I don't have any evidence for this, but the logic is not that "Everyone's wages go up." Rather, it's, "The folks at the lower end of the wage spectrum gain negotiating power to ask for more."
- _kulang 3y ago
  The folks at the higher end of the wage spectrum lose negotiating power too. I assume that outliers skew high, hence average wage gets suppressed. I’d be more interested in median wage data/trend, which didn’t seem to be in that paper. Plausibly, if those at the higher end have wages clamped, and those at the lower end can see what they could be worth, wage spend becomes a mean reverting process except with a downward trend driven by a company’s general aversion to spending money. From the employee perspective, it is of course more fair to be transparent about wages. I personally believe it’s for the best, at least socially and for worker’s rights. In some sense it can lead to worse outcomes, but these are really a reflection of the profit-seeking behaviour of companies, which is also made more effective by wage transparency. I would rather try to fix the underlying issue than not have wage transparency.
kibwen 3y ago
Quoting the article: "We find that in markets with high individual bargaining power (low unionization rates), pay transparency mandates lower average wages around 2%, as we find in the context of the U.S. private sector. In markets with low individual bargaining power (high unionization rates), pay transparency mandates have little to no effect on wages." This seems to not be an argument against pay transparency so much as it's an argument for unionization. Transparent prices in any market are important for market efficiency, and that's no less true for the labor market. The mechanism for decreasing wages is "employers resist issuing individual raises because they think everyone else will want a raise too", and that's a cultural thing that will pass in a few generations. I have worked on teams with plenty of people who made more than me, and I didn't take it personally because I knew full well how brilliant and hardworking they were.
- fnordpiglet 3y ago
  They discuss averages though. What is likely happening is a convergence on the mean, and a pulling in of the tails. The stars (or the stars at negotiating) are likely making less in both scenarios, and the disproportionately low wage earners are making more, while the middle of the distribution is unaffected. (No proof of this forthcoming just conjecture)
gamblor956 3y ago
A study where the "zero year" just happens to be the first year of the Great Recession... This study is a great example of p-hacking and a very poor example that wage transparency affects average pay. For a counter-example: wage transparency has resulted in runaway salary inflation in athletics, entertainment, tech, and executive salaries.
- yMMe2WYE_D 3y ago
  I am not sure about other examples, but isn't it just "winner takes it all market" in case of professional athletes? Fans want to see their favorite player and that brings in money. Meanwhile everyone else will be paid peanuts.
  - gamblor956 3y ago
    No, thanks to union bargaining the other players make at least millions in all of the major professional leagues. This is in large part due to players being transparent with each other about how much they were getting paid, which led to the formation of the players' unions several decades ago, and to the subsequent stratospheric rise in player salaries. The point is that wage transparency enriches all of the players, not just the good ones.
P_I_Staker 3y ago
Yeah, I could see it making things fairer, but not necessarily more prosperous overall.
kaycey2022 3y ago
I think it makes sense. With transparency, the information may not be able to capture the differences in expertise of each worker - like "someone who has delivered x products and is well versed in techniques a, b, and c". The market will just show a blanket designation giving an impression of fungibility (which unenlightened management already have) and the tendency will be to push rates down to the lowest common value.

Zetice 3y ago

I don't have any evidence for this, but the logic is not that "Everyone's wages go up." Rather, it's, "The folks at the lower end of the wage spectrum gain negotiating power to ask for more."

_kulang 3y ago
The folks at the higher end of the wage spectrum lose negotiating power too. I assume that outliers skew high, hence average wage gets suppressed. I’d be more interested in median wage data/trend, which didn’t seem to be in that paper. Plausibly, if those at the higher end have wages clamped, and those at the lower end can see what they could be worth, wage spend becomes a mean reverting process except with a downward trend driven by a company’s general aversion to spending money. From the employee perspective, it is of course more fair to be transparent about wages. I personally believe it’s for the best, at least socially and for worker’s rights. In some sense it can lead to worse outcomes, but these are really a reflection of the profit-seeking behaviour of companies, which is also made more effective by wage transparency. I would rather try to fix the underlying issue than not have wage transparency.

kibwen 3y ago

Quoting the article: "We find that in markets with high individual bargaining power (low unionization rates), pay transparency mandates lower average wages around 2%, as we find in the context of the U.S. private sector. In markets with low individual bargaining power (high unionization rates), pay transparency mandates have little to no effect on wages." This seems to not be an argument against pay transparency so much as it's an argument for unionization. Transparent prices in any market are important for market efficiency, and that's no less true for the labor market. The mechanism for decreasing wages is "employers resist issuing individual raises because they think everyone else will want a raise too", and that's a cultural thing that will pass in a few generations. I have worked on teams with plenty of people who made more than me, and I didn't take it personally because I knew full well how brilliant and hardworking they were.

fnordpiglet 3y ago
They discuss averages though. What is likely happening is a convergence on the mean, and a pulling in of the tails. The stars (or the stars at negotiating) are likely making less in both scenarios, and the disproportionately low wage earners are making more, while the middle of the distribution is unaffected. (No proof of this forthcoming just conjecture)

gamblor956 3y ago

A study where the "zero year" just happens to be the first year of the Great Recession... This study is a great example of p-hacking and a very poor example that wage transparency affects average pay. For a counter-example: wage transparency has resulted in runaway salary inflation in athletics, entertainment, tech, and executive salaries.

yMMe2WYE_D 3y ago
I am not sure about other examples, but isn't it just "winner takes it all market" in case of professional athletes? Fans want to see their favorite player and that brings in money. Meanwhile everyone else will be paid peanuts.
- gamblor956 3y ago
  No, thanks to union bargaining the other players make at least millions in all of the major professional leagues. This is in large part due to players being transparent with each other about how much they were getting paid, which led to the formation of the players' unions several decades ago, and to the subsequent stratospheric rise in player salaries. The point is that wage transparency enriches all of the players, not just the good ones.

P_I_Staker 3y ago

Yeah, I could see it making things fairer, but not necessarily more prosperous overall.

kaycey2022 3y ago

I think it makes sense. With transparency, the information may not be able to capture the differences in expertise of each worker - like "someone who has delivered x products and is well versed in techniques a, b, and c". The market will just show a blanket designation giving an impression of fungibility (which unenlightened management already have) and the tendency will be to push rates down to the lowest common value.