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Pay Day

How much you earn – the last taboo?

David Brancaccio Aug 20, 2012
Pay Day

How much you earn – the last taboo?

David Brancaccio Aug 20, 2012

I dare you: The next friend or co-worker you see, tell them how much you get paid.

Couldn’t do it, could you?

Salary and compensation is as taboo a subject as you can get in America. Many people will talk about their sex lives before they’ll talk about the size of their paycheck. But the secrecy surrounding our paychecks may be one reason pay can vary so much, sometimes in unfair ways.

That’s not the case for one Boulder, Colo. company: “We have what I like to call ‘Extreme Transparency,'” said Amanda Bybee, vice president at Namaste Solar.

There’s a lot of sunshine going on inside this solar power installation company. Every employee can see a spreadsheet listing what everybody else makes. Terry Lima, an accountant, said she looks at it all the time and sees quite a few folks paid more.

“I don’t feel short-changed,” Lima explains. “I am also grateful to know that there’s no back-door deals, that I don’t have to do some political something so that I can make more money for myself.”

Namaste is extreme in other ways, too. It’s employee-owned. Every worker, including Surendra Thapa, the forklift driver, is privy to all the company’s financials, including every permanent employee’s pay rate.

Do you tell your friends, family, or co-workers how much you make? Depends on your income. Explore answers and data from more than 150 respondents.

Given this culture, I figured people like Bybee, the VP, would tell me tell me this transparency about salaries is all sweetness and light. But no.

“I have a colleague who’s making a little less than me who comes to me and says ‘I don’t think you deserve to make more than I am making,'” Bybee said. “This is a true story. He said it respectfully. I listened to him with as much openness as I could. And we’re talking a difference of a thousand dollars a year.”

Bybee said they worked it out and are buddies again. But CEO Blake Jones acknowledges these conversations are uncomfortable.

“But it’s worth, being out in the open,” Jones said. “It’s worth facing the fears that you might have about talking about it.”

Being clear on salaries makes good business sense, Jones says. It builds trust and also makes co-workers accountable — they notice if someone’s getting paid to goof off. But the transparency is for inside the company. Tellingly, neither Jones nor Bybee talks about their pay rate outside the company.

“The taboo around money may be our last standing taboo,” said New York University financial sociologist Kate Zaloom.

Zaloom says this explains one of the great mysteries: how it is that given wide gaps in income in America, everybody walks around thinking we’re so equal.

“Of course everyone in America thinks that they’re middle class,” Zaloom said. “But the only way that someone who makes $12,000 a year and someone who makes $200,000 a year can assume that they are all in the same social category is by never actually revealing what they make to each other.”

It’s not just a social taboo. Many employers enforce this.

“I am in fact prohibited from telling anyone how much I make contractually,” Zaloom said.

Had Zaloom worked not for NYU but the University of California, we could look up her pay ourselves. The Sacramento Bee newspaper was able to put the salaries of California state employees onto a website for all to see. How’s that make the workers feel, employees like UC Berkeley Professor David Card?

“I’m a labor economist and for a labor economist we’re always analyzing salaries. So it’s possible I might be desensitized,” Card explains. 

So, Professor Card, how much do you make?

“My salary from the university is around $300,000 a year,” he said without hesitation. “Well, you can look it up on the Internet.”

Card studied the effect of the salary website and found that fellow employees who noticed they were doing better than the average (golden) bear kinda shrugged, but people who were doing worse than their peers tended to be really upset.

“And that might be one of the reasons why employers insist insist on pay secrecy as part of the deal on working there,” Card said in a wry tone. “It’s really going to make the lower wage people much less happy.”

Maricruz Manzanares is a senior custodian at UC Berkeley with more than 12 years experience. She also now sites on the board of her service employees union local. Together, we navigate to the Sacramento Bee’s salary website on my iPad.

Here’s what it says about Manzanares’s pay: $34,493.10.

The pay is obviously no surprise to Manzanares. But as that $34,000 sits there, stark on the iPad screen, she thinks of her three children and how that salary doesn’t leave much left over to pay for their college.

“How can we ask my kids to…put more into something that me as a mother cannot even help them with,” she wonders.

But she sees there is power in getting salaries out into the open. Her union has used the website to prepare for contract negotiations.

“Actually it’s good that somebody put this website on there so we can check,” Manzanares said. “If we put Mr. Yudof’s name in there, it will show up.”

Mark Yudof is the president of the California University system. His salary, according to the database: $560,594.00. Over half a million dollars.

“This is only for him and his wife,” Manzanares notes. “My salary has to be for my three children and me. So…that’s ridiculous.”

Which gets us to the special case of executive salaries. Tomorrow in our Payday series we take a look at how companies decide what to pay those at the very top.

More than 150 people responded to our question whether or not they talk about their salary with friends, family, or co-workers. View a chart show the trends behind their responses and read excerpts.

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