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What counts as pay transparency? Depends on who you ask

Pay transparency is having a moment, but many companies are implementing it in different ways.
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Francis Scialabba

· 7 min read

Americans have a cultural aversion to discussing personal income. A 2018 survey from Capital Group found “salary or household income” to be Americans’ foremost conversational taboo, ahead of “marriage problems, mental illness, drug addiction, race, sex, politics, and religion.” And when it comes to the corporate world, many companies make it a matter of policy to keep the reality of who makes how much locked in a figurative vault; according to 2021 research from the Institute for Women’s Policy Research, “nearly half of full-time workers reported they were either discouraged or prohibited from discussing wages or salary” between 2017 and 2018.

But workers’ willingness to share and even demand salary details may be on the rise, as employees across various industries spanning tech, publishing, media, and human resources have collected their own salary data, in an effort to highlight what they make and, if necessary, hold their employers accountable.

Organizations that ignore employees’ demands for greater transparency may struggle with retention. A 2021 report from Beqom found that the push for salary transparency is particularly high among younger workers. “Our report found more than half (58 percent) of employees would consider switching jobs for more pay transparency, and for Gen-Z, the number jumps to 70 percent,” Beqom’s founder Tanya Jansen told Inc. earlier this year.

Laws vs. corporate policies vs. workers

Advocates for pay transparency argue that secrecy regarding salaries perpetuates unequal compensation between employees. The lack of transparency has contributed especially to pay inequity for women, who earned 82 cents for every dollar earned by men in 2020, according to data from the Bureau of Labor Statistics. A LeanIn survey from 2021 found that “Black women in the US are paid 37% less than white men and 20% less than white women,” while Census data from 2019 indicates that Hispanic women earned 53% of what white men earned in that year, the lowest demographic recorded.

While the Equal Pay Act of 1963 outlawed wage discrimination based on gender at the federal leval, additional laws have been enacted in 19 states and Washington, DC, that make it illegal for companies to stop workers from discussing wages, according to a Department of Labor tracker, and Barack Obama signed an executive order in 2014 oulawing retaliation for workers discussing compensaion. Both Colorado and California passed additional laws in 2021 specifically targeting wage transparency—in California, most companies with at least one employee in the state must report salary data to the Department of Fair Employment and Housing, while Colorado businesses must divulge salary ranges for open positions.

“If you make pay transparent in its extreme form, it clearly illuminates inequities, like gender inequities, or other types of inequities,” Todd Zenger, a professor of strategic leadership at the University of Utah, told HR Brew.

And some workers are adamant that money must be talked about openly. Salary spreadsheets compiled by anonymous employees in the publishing, media, and HR sectors have been circulating online for years, and at least one effort launched by workers attempts to highlight the wage gap for people of color in tech.

Taylor Poindexter, a software engineer and cofounder of the Black Code Collective, recently told Bloomberg how her efforts to collect salary data from her peers transformed her idea of fair compensation: “I realized that, as a woman and a person of color, maybe I’m not as well-paid as I could be,” she told the outlet.

“It’s this cultural thing in our country, or in the West…where we just don’t talk about this,” said Scott Morales, a publishing coordinator at Oxford University Press in New York, which recently won a vote to unionize with the News Guild.“I just think that we’re kind of like wage-ignorant in this country…learning more about this stuff and having honest conversations with one another is extremely revealing,” he explained to HR Brew.

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Transparency’s opacity

Some organizations are heeding the call for greater pay transparency, albeit with their own ideas of what it entails. Chris Savage, CEO and cofounder of the video marketing firm Wistia, told HR Brew about his company’s version of salary transparency, which was implemented when workers kept voicing uncertainty over how to grow their careers. Wistia’s system includes levels of seniority that correspond with a salary range that’s updated annually, in accordance with market data bought from comparable firms. At the company, ranges aren’t shown to everyone, only to workers at the same level.

Revealing a range, rather than a specific number for every employee, “encourages people to compare themselves with job requirements, rather than with others,” explained Aleksandra Paszkiewicz, head of people at the software company Netguru, which uses a similar model.

Justifying compensation packages against market norms should inspire confidence in at least some semblance of fairness, but it’s an imperfect system, because it often discounts the relationship between performance and pay, explained Zenger. “You can tell me what my market wage is at the outset, but then I stay for five years, and [if] I make all kinds of very specialized firm-specific investments in the company, which I can’t take anywhere else now, what’s my market wage?”

At the financial platform Expensify, there’s an internal marketplace of sorts: “Your compensation is determined by your peers,” David Barrett, Expensify’s CEO, said to HR Brew. Everyone in the company has their pay determined by a vote, in which a worker’s output is assessed according to the value it creates for the company. “You can do something that’s not very valuable—or people just don’t recognize the value—[but] it’s not going to make a lot of money,” Barrett said.

The kind of radical transparency in which all salaries within an organization are made fully public is rare, but not wholly unheard of; the tech company Buffer, for example, has all employee salaries listed on its website. Still, unveiling salaries for all to see can make workers envious. When salaries are listed in full view, Zenger noted, workers can “respond with envy, which is emotionally taxing, but it’s also distracting. It can be taxing to the firm in the sense that it reduces effort.”

More normalized in the future?

It isn’t as though transparency, or mere pledges to eradicate wage inequality in the workplace, suddenly vanquish every semblance of the pay gap. For example, 2020 research from Zenger and the HEC Paris professor Tomasz Obloj found that wage transparency helps achieve more equality across the board, but doesn’t ensure complete wage equality or worker satisfaction.

With websites such as Payscale and Glassdoor offering job seekers the ability to search salary averages for specific trades in a pinch, a cultural shift in expectations for pay transparency is to be expected, argues career coach Judith Gerber.

“People's idea of privacy has changed…the web has changed all of that, technology has changed all of that,” she said to HR Brew.

Younger workers want a “fair and just workplace where people of all ethnicities [and] gender identities are treated fairly. And so some degree of transparency is required to inspire confidence in those employees that” their employers care, said Zenger.

Scott Morales, for his part, said that “it’s a very important time for our industry and many industries, to be able to have this conversation of, ‘Well, maybe, maybe we should talk about what we make, maybe we should share this with other people so that we can realize that we're all being exploited.’”

Do you work in HR or have information about your HR department we should know? Contact Sam Blum via the encrypted messaging app Telegram (@SamBlum_Brew) or simply email [email protected].

HR is challenging. HR news doesn’t have to be.

HR Brew keeps you effective in the fast-changing business environment.