pay transparency

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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.” But this pay transparency taboo may be changing due to Gen Z’s generational comfort with sharing almost everything on the internet. Beqom founder Tanya Jansen told Inc. “Our 2021 report found more than half (58%) of employees would consider switching jobs for more pay transparency, and for Gen-Z, the number jumps to 70%.”

Employees across various industries including 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. There has been a tremendous amount of media coverage on pay transparency including the Google employee who created a spreadsheet for Google workers to share their salaries to the Gravity Payments CEO who set a minimum salary at his company of $70,000/year.

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 Todd Zenger, Professor at University of Utah.

Advocates for pay transparency argue that secrecy regarding salaries perpetuates unequal compensation between employees. It contributes to pay inequity for women who earn 82 cents for every dollar earned by men in 2020 according to the Bureau of Labor Statistics. A LeanIn survey from 2021 found that “Black women in the U.S. are paid 37% less than white men and 20% less than white women.” Census data from 2019 indicates that Hispanic women earn 53% of what white mean earned in that year.

The Equal Pay Act of 1963 outlawed wage discrimination based on gender at the federal level and additional laws have been enacted in 19 states and DC that make it illegal for companies to stop workers from discussing wages. Barack Obama signed an executive order in2014 outlawing retaliation for workers discussing compensation.

What are the challenges for your organization if you pursue pay transparency? Employees could feel slighted if the organization is still working to identify and eliminate pay gaps. You must have a clear policy on how pay rates are determined. If the strategy isn’t accurate and defendable, employees will see favoritism to certain work groups or employee types. The pay policy has to be regularly published and kept updated.

What is the upside for pay transparency? Making the effort to ensure that workers are being paid equitably for equal work, builds trust and opens the door to an improved company culture which ultimately can increase employee retention. In this job market that is a major plus.

Interested in understanding if your pay level is competitive? Contact Smith Hanley Associates’ Executive Recruiters at jobs.smithhanley.com.


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