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Invisible Dollars: Salary Transparency's Impact on Your Pay Rate

Being transparent with colleagues around earnings and wages is an important and necessary step individuals can take to help to decrease the wage gap.

The first time I shared my salary with a coworker, it felt like I was divulging a dark secret.

Turns out, both of us were making the same amount of money for the same job, which came as an immediate relief to us both. But the experience still felt emotionally draining, and I found myself lamenting the fact that the only way to figure out where I stood, salary-wise, was to seek out answers for myself.

In our culture, it’s sometimes too easy to fall into the trap of equating our income with our worth as individuals. This, coupled with the fact that many companies have historically discouraged—or flat out prohibited—sharing salaries with other employees, means that salary discussions can make many workers feel a little squirrely.

But lately, discussions around the need for salary transparency have become more common. Last year, the New York Times published a piece debunking the myth that private sector employers can legally prohibit employees from discussing their compensation. The article argued that workers should tell their coworkers how much they make in order to begin chipping away at some of the enormous pay disparities on the basis of gender and race.

Though companies can sometimes profit from keeping their employees in the dark about pay discrepancies, doing so can also come at a steep cost, especially in terms of alienating workers and contributing to high turnover rates. When implemented into company policy, pay transparency strategies have the potential to make employees feel more empowered. And though some organizations may initially fear this will cost them, doing more to encourage salary transparency could be a worthwhile investment.

Being transparent with colleagues around earnings and wages is also an important and necessary step individuals can take to help to decrease the wage gap, which remains daunting and especially severe for women of color. Even as white women in the U.S. earn 79% of what white men make, Black women earn 63% while Latinx and Native American women make just 54% and 57%, respectively. But even while salary transparency becomes increasingly common, openness about compensation isn’t always easy—especially if it’s not written into the fabric of a company’s culture and practices.

Katie Mitchell, 26, is an Atlanta-based technical writer in the cloud computing industry. Though she has shared her salary with coworkers in the past, she has found that people at her current job aren't as willing to disclose their salaries, which has led her to believe that they may be earning more than her. “One apprehension I have is that, as a Black woman who is at least ten years younger than all of my mostly white coworkers, if we share salary information, mine will be way lower,” Mitchell tells Supermaker, adding that discovering she was making less than her coworkers would leave her feeling embarassed.

“One apprehension I have is that, as a Black woman who is at least ten years younger than all of my mostly white coworkers, if we share salary information, mine will be way lower”

Though Mitchell hasn't worked for a company that explicitly forbade sharing salaries, she feels the act is still implicitly discouraged. “At this point, it feels like there doesn't have to be a rule against salary transparency because it's so ingrained into folks to not talk about it,” Mitchell explains. “It empowers workers, but the workers who are at the top of salary ranges, generally white folks, may feel like telling Black and Brown folks isn't beneficial to them.” Mitchell adds that she wishes white colleagues would start these conversations instead of relying on minority colleagues to breach these sometimes awkward discussions.

One possible way to help make things more equitable is for companies to begin developing strategies based on the assumption that employees are increasingly sharing what they are making, says Melissa Nightingale. Nightingale is a founder and partner of Raw Signal Group, a Toronto-based leadership training company. In her experience, Nightingale has found that many companies aren't properly training management and leadership to develop practical systems that empower workers—and doing so can create serious problems.

“It empowers workers, but the workers who are at the top of salary ranges, generally white folks, may feel like telling Black and Brown folks isn't beneficial to them.”

Additionally, Nightingale feels that many leaders simply aren't prepared to handle salary discrepancies, especially as companies grow and scopes of work change. “People can sort of assume that compensation doesn’t have to be checked in on, and a lot of leaders get themselves into a bad situation,” Nightingale tells Supermaker, noting that this can be especially tricky when, for example, an individual starts as an intern and grows within the company and is making significantly less than the new hire they work alongside.

Nightingale says that organizations need to stop assuming that workers discussing salary will automatically lead to an increase in their overall employment cost. In fact, they need to start assuming that these types of discussions will inevitably take place and be proactive in curbing negative repercussions, noting that losing a strong employee over a salary dispute could cost employers 1.5 to 2 times an employee’s annual salary.

She paints me a picture of what it might look like to lose such an employee over a pay dispute: For a worker making $60,000 who discovers she is making $5,000 less than a colleague, bringing the two salaries to parity would cost the company $5,000. In contrast, failing to do so could cost the company $90,000 to $120,000 if the disgruntled employee decides to quit. “When faced with the $5,000 cost, people view it in isolation and think it’s going to cost the business money,” but addressing salary discrepancies proactively, she says, often makes more sense. “It’s really good business math in addition to being a decent human,” she adds.

In order to avoid or reduce the likelihood of the above scenario playing out in a company, Nightingale suggests developing a proactive, integrated compensation strategy rather than viewing individual salaries in a vacuum. This doesn’t mean companies have to pay everyone the top or bottom of the market, Nightingale adds, but employers can get into trouble when people start talking and huge, seemingly arbitrary salary discrepancies are unearthed. She also notes that part of this strategy should include sharing the distinction between junior and senior roles so that employees can understand the difference between seniority levels, know where they currently stand, and grasp what is required to grow within the company.

One organization who has adopted a transparent compensation policy is Glitch, a tech company based out of New York City. The software company shares salary ranges of roles with candidates and employees with the goal of paying everyone fairly. Antoinette Smith, 39, a Minneapolis-based full stack engineer at Glitch, joined the company in December and has experienced these policies first-hand.

“This is the first company [I’ve worked for] where the CEO has said multiple times—publicly—that it’s okay for us to share our salaries,” Smith tells Supermaker. She explains that Glitch also shares a document with employees showing all of the salary ranges for all of the roles at the company. “I’m able to see the ranges for everyone—including the CEO,” she adds.

Prior to joining Glitch, Smith felt some apprehension in sharing her salary. Now, she has come to view things differently and notes that her company’s transparency around compensation has made her feel more empowered. “Being someone who is not white and not male, it makes it a lot easier for me to feel comfortable talking about my salary,” she says. “If I have questions I don’t feel like I’m going to be cast as difficult person for asking.”

Given today’s increased debate over the merits of salary transparency, many workers are feeling more empowered than ever to disclose their income. But doing so can still be incredibly stressful for many workers, particularly women of color and minorities. Companies who claim they want to make a difference and work to improve or eradicate the wage gap ought to consider what they can do within their organization to take some of the burden off of employees. After all, companies can, and should, play a role in empowering their employees and doing so can potentially help to avoid losing money due to poor attrition rates.

Today, many organizations are still not motivated to encourage employees to share salaries because they are afraid that doing so will mean losing financial leverage. But, there are many companies, like Glitch, who are trying to do right by their employees by being more transparent—and who see such moves as worthy investments in their team and company culture. Not only can developing transparent compensation strategies help curb employee turnover, it can also do wonders when it comes to empowering minority workers and fighting the pay gap.

Companies who claim they want to make a difference and work to improve or eradicate the wage gap ought to consider what they can do within their organization to take some of the burden off of employees.

Ultimately, for Smith, working at a company that has developed policies around salary transparency has made her feel more in control of her career, and expanded her conceptions of what’s professionally possible. If she ever leaves Glitch, Smith says she would do her best to join another company that also prioritizes salary transparency. After all, she believes that the best way to lead and empower is by example: “The people in power at organizations have to always say it’s okay,” Smith concludes. “If they don’t people will just assume that it’s not.”

Putting it out there 💵

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