Can talking about salaries reduce the wage gap?
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Females with a college degree make just 74 cents to every dollar a male worker earns with an equivalent degree, according to recent census analysis.
The wage gap probably won’t go away any time soon, but are there some things we can do to increase pay equity between men, women and people of color? We turned to Ask a Manager’s Alison Green who says transparency could decrease the divide.
David Brancaccio: It’s taboo in many workplaces. In, fact some employers ban you from talking about what you get paid. You think that’s a problem.
Alison Green: Well, it’s legal for most workers. There’s a federal law, the National Labor Relations Act, that prohibits employers from banning people from talking about salary. But the idea is that you need to have the ability to organize with your co-workers and talk with your co-workers about wages and about working conditions.
Brancaccio: And the theory is that some transparency about what each and every one of us gets paid will help shed light on inequities.
Green: Yeah, I mean there’s a ton of research showing that women and people of color get paid less than white people and white men across the board. And so keeping salaries a secret means that it’s much harder for people to spot those pay discrepancies and to address them.
Brancaccio: Well, many employers don’t like doing that.
Green: That’s true. It’s to their advantage to have that salary secrecy — it’s only to their advantage, not to anyone else’s. But I would argue that salary transparency is actually better for everyone in the long run. I mean, if you have people who realize that they’re being paid a low or a below-market salary, or less than the person in the cubicle next to them doing the same work, people are going to get frustrated, they’re going to leave, they’re going to be less engaged in their jobs. So, you want to have a salary structure that you can defend, if it’s public.
Brancaccio: The employers argue that sometimes there are certain subtle reasons that a person would get paid a little more or a little less than a co-worker.
Green: Yeah, and it’s fine to do that. It’s fine to pay people differently, if it’s based on merit. So, an employer can say, you know, we’re paying person X more because they brought in twice as much client revenue as you did last year, or they manage higher level projects, or more demanding clients, or whatever it might be. But you want to be able to point to something like that. And if you can’t, there is a problem. And that’s not to say that you’ll never have an employee who disagrees with that reasoning, or who argues that their work does merit more. You will. I mean, that’s human nature; you might be wrong, they might be wrong, but you need to be able to make a reasonable argument for why you’re paying what you’re paying.
Brancaccio: I once spent some time at a solar panel company out West that had kind of radical transparency about what everyone was getting paid. They’d stick it up on the wall. And there was a case there where one manager was paid a couple hundred more a year than the other. And it really bred resentment, just the couple hundred dollars, the person said: ‘that person is not worth a couple hundred dollars more than me.’ It’s complicated.
Green: It is complicated, and our emotions get really tied up in this. We see what people are being paid as a measure of their worth and a measure of our own worth. But the alternative of just shrouding it in secrecy and keeping it from employees, not letting them know what your salary structure is and where their work fits into that, is such a recipe for … not only low morale, but also real structural inequities. And that is where you start seeing things like a gender gap or a gap based on race.
Brancaccio: You opened my eyes to a very interesting study from last year that’s about African-American employees when they’re negotiating for a raise or for a salary. Give me a sense of what that study showed.
Green: The study you’re referencing found that when black job applicants negotiated their salaries when they were first getting hired, the people they were negotiating with viewed them as more aggressive and more pushy than white job applicants who were doing the same type of negotiating. And they even mistakenly thought that black job applicants were negotiating more and harder than white applicants, even when they were asking for the same amount. So what you find is people getting lower starting salaries as a result of this, and you also find people being afraid to negotiate. Because people of color and women see this research, they see the reactions that they get, and they think: oh, if I’m going to be perceived negatively as a result of doing this, maybe it’s not in my best interest to negotiate, or negotiate hard. And that keeps salaries down.
Brancaccio: All right, well, I’m asking a manager, Alison. We don’t want people to have that takeaway, ‘Don’t negotiate because people will think you’re pushy and there’ll be blowback.’ What is your advice?
Green: The thing to remember is this is data in the aggregate. It doesn’t mean that if you’re a woman or a person of color that every time you negotiate you’ll be penalized for it. Much of the time you won’t and, in fact, the penalty for not negotiating over the course of your career is going to be a lot more significant because it’s going to depress your wages so much. Your next salary is going to be based on the salary they’re going to give you, a certain percentage leap, it’s going to be tied to what you’re making now. And so you want to do everything you can to get that initial number up there.
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