[We] have an enormous taboo against talking about money … but all that taboo does is take power away from the employee and give it to the company.
Bosses … love it when you keep your salary a secret, because it tilts pay negotiations in their favour. It's a concept called ‘information asymmetry’. If you don't know what the going rate is for your salary, it's easier for the company to rip you off.
There is another good argument for wage transparency: that it makes for a fairer world.
Effects on Job Searching
- Studies find better access to job information can encourage smarter job searching, help improve the quality of job matches, and may lead to shorter unemployment spells for workers.
- Providing more information to job seekers about job application processes improves the diversity of applicant pools by boosting the number of female job applicants.
Impact on Pay Negotiation
- Salary transparency helps expose pay gaps between otherwise similar workers, encouraging underpaid employees to renegotiate or move to better-fitting jobs, improving overall efficiency in labor markets.
- Men are more likely to negotiate salary than women. But studies show this “negotiation gap” disappears when information about other job applicants' negotiation experience is public information.
- While the literature on productivity and salary transparency is mixed, most studies find employees are more productive and engaged when pay structures are transparent and predictable.