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Post Leadership
Posted at 10:09 AM ET, 07/06/2011

Should you know your coworker’s salary?


New research by the Institute for Women’s Policy Research shows that nearly half of U.S. employees are either formally or informally discouraged from discussing their salaries with coworkers. (Paul Drinkwater - NBC PHOTO: PAUL DRINKWATER)

Sharing salary details has long been one of the great taboos in Corporate America, ranking even higher on the list of “what not to do at work” than getting drunk at the company Christmas party or crying during your performance review. But for more and more employees, it’s not just an office no-no. A new paper by the Institute for Women’s Policy Research (hat tip to Leadership Lab) found that almost half of all workers in the U.S. “are either contractually forbidden or strongly discouraged from discussing their pay with their colleagues,” making it harder for employees to discover whether they’re being discriminated against or not.

That may seem like a strikingly high number, especially if you’re one of the many nonprofit workers or federal employees who toil amid strictly defined pay bands or have a good idea of what your cubicle-wall neighbor makes just because you have access to a database. But in the land of corporate profits, such transparency is about as common as a CEO who chooses to fly coach instead of by private jet.  

Whether or not such pay secrecy is a good thing is the subject of plenty of debate. HR thinker Tammy Erickson says, as I’ve noted before, that more companies should open up the payroll books and share what everybody makes. Such transparency can lead to “a pretty healthy obsession” with increasing the quality and quantity of work and lead to more “adult arrangements” between workers and their supervisors. Others believe sharing pay particulars helps employees assess their value—and that the only people who really benefit from secret salaries are the H.R. department, who can cover up their mistakes.

Yet not so, say researchers from Berkeley and Princeton, who found that employees who know what their peers make—especially if their salaries are below median earnings—were more dissatisfied with their jobs than their peers who knew nothing. Because we’re constantly comparing ourselves to the people around us, such knowledge simply makes us disgruntled and anxious, rather than more motivated to get ahead.

But let’s put motivation issues aside for a moment. It is interesting to question whether transparent payrolls might be the answer to closing the gender pay gap after all these years. While open salaries may hardly seem like a practical solution for most companies, the IWPR paper is convincing when it points out that while the average gender wage gap is 23 percent for all full-time workers, it’s only 11 percent in the federal government, where pay rates are publicly available. No matter how many child care centers, on-ramping programs or educational initiatives are put in place to try to keep women in the workforce—and therefore, their salaries from falling behind—discrimination is still potentially responsible for up to 40 percent of the wage gap, economists have estimated.

While I’m usually of the mind that more transparency is a good thing, when it comes to take-home pay I know that ‘rational economic man’ can become a little, well, irrational. And while I love the idea, at least in theory, of companies revealing enough salary information to show whether or not they’re paying women less, I know that has about as much of a chance of happening as an across-the-board pay raise in a struggling economy. And I can certainly see how sharing too much could put a dent in employee morale.

But by all means, let’s not contractually forbid employees from telling each other what they make. After all, having too many rules about what employees can and can’t tell each other is likely to do more harm to a workplace culture than any mild disgruntlement from someone who thinks they’re underpaid. I’m with Erickson—we could all use more “adult arrangements” at the office, and employees should be free to decide whether they want to broach that long-held taboo.

Do you think you should know what your coworker makes? Vote, and share your thoughts in the comments section below.

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By  |  10:09 AM ET, 07/06/2011

 
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