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I'll tell you my salary if you tell me yours

Published on Friday, 18 Apr 2014
President Obama hopes open chat about salaries will boost pay transparency.
Photo: iStockphoto

Can water-cooler talk help fix the gender pay gap? US President Barack Obama seems to think so. He recently signed an executive order that would ban federal contractors from retaliating against employees who discuss their pay with each other. The White House said the move, one of two executive actions Obama took to mark Equal Pay Day this month, was designed to “encourage pay transparency, so workers have a potential way of discovering violations of equal-pay laws”.

An effort to remove fear of retaliation is a good thing – and good politics. And the White House was careful to note in its description of the order that it “does not compel workers to discuss pay”.

Still, actually getting people to break one of the workplace’s most ingrained taboos is a tall order. People tell their cubicle mates about last night’s bad date. They share pictures of themselves and the food they eat with their colleagues on social media. But while they may gossip about other people’s pay, they do not, as a rule, talk about their own.

“It’s considered a taboo subject that is endemic in society,” says Garry Mathiason, a senior class action litigator with the employment law firm Littler Mendelson. Whether you’re at a dinner party or an office meeting, he says, “there is such a strong phobia to sharing pay information”.

As a result, it is not clear whether Obama’s executive order will really make much difference. For one, Mathiason says, the National Labour Relations Act already protects most workers who choose to discuss pay from adverse action. “I personally don’t see it adding much,” he says.

Moreover, an unwillingness to discuss pay is such a cultural no-no in society – and the workplace – that even in organisations that don’t actively discourage employees from discussing salaries, employees are not likely to do it. “I think employees assume that’s part of the confidential information; that they shouldn’t share it,” Mathiason says.

Another assumption by workers is that those companies that do dissuade workers from swapping salary secrets do so to keep them in the dark and, as a result, keep salaries lower.

But while that may sometimes be the case, Peter Cappelli, management professor at the University of Pennsylvania Wharton School, says the primary reason managers suggest workers don’t talk about pay is to avoid the headaches that come with it.

That is particularly the case if they are managing white-collar professionals whose work can be more difficult to measure objectively. “They know they are just going to get into these endless defensive battles. That’s partly because their own performance management systems aren’t that good, and partly because people don’t want to believe they’re not that good,” Cappelli says.

After all, even in the most equitable organisation, it’s not easy for employees to accurately compare their work to that of their peers. Two well-established ideas in psychology show why.

“Illusory superiority”, or the “Lake Wobegon effect”, says most people are overconfident in their own abilities and think they’re better than average. As a result, they are disappointed if they find out they are making less than their peers – and don’t necessarily get a boost if they find out they’re making more.

A 2010 paper by the US’s National Bureau of Economic Research, for example, studied what happened when employees at the University of California were told about a website listing employees’ pay. Workers with salaries below the median had lower job satisfaction after seeing the site, while those who earned more than the median saw no increase in job happiness.

The other idea is “equity theory”, which says people determine fairness by looking at what they put into a job and what they get out of it, and comparing it with their colleagues. That may be easy for workers on a production line or on a commissioned sales team, but it’s much harder for corporate workers who stare at a computer screen all day.

“What seems on the surface to be a totally objective economic calculation is actually very subjective,” says New York-based organisational psychologist Ben Dattner. “Are you surfing Facebook and I’m totally focused? Did you go to graduate school and I didn’t? Did you have a brilliant money-saving idea your co-worker doesn’t know about?”

There is one environment, however, where Obama’s executive order might make an impact, Cappelli says. In organisations that have a culture of fear – where people are motivated to do things out of fear of losing their jobs, getting punished or of suffering other consequences – it could prompt them to be more willing to share what they make. But “if you’ve got an organisation where people are not talking about comparative pay now, they’re not really going to change their behaviour,” he says. Washington Post

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