US pay transparency laws result in worker discontent
irishtimes.com
irishtimes.com
"US pay transparency laws result in workers realizing that their employers are trying to underpay them and this results in workers being discontent," is the truth. This is the whole point of transparency, which I assume is what you are getting at. The transparency doesn't share any of the blame however, so the wording of the title is unfair.
Sunlight is the greatest disinfectant.
I like how it's assumed your wife or any other exec reliably knows their worth.
> One of her direct reports got a promotion and when another found out, he complained. Meanwhile, he did less than half the work of the other.
Metrics used for measuring amount of work done are reliably unreliable in many fields.
On a more serious note, does anyone knows how it came that talking prices for labor become a taboo at first place? Was it cultural? Did it become a thing with the industrial revolution or something? What is the history of "don't talk salaries"?
It's not the same everywhere so it must be for different reasons everywhere but IMHO its important to recognise the story behind it so to reason for what to do next.
I’m also not aware of any company culture that revels[0] in discussing employee pay and doesn’t face legal requirements to do so.
[0] Exceptions for companies that do so but by deliberate action of founders/CEO rather than a bottom-up company culture https://www.inc.com/magazine/201511/paul-keegan/does-more-pa...
FTFY
Keeping wages secret lets everyone keep believing that.
Not a joke!
Reminds me of the old joke "Bill Gates walks into a bar. On average everyone was a millionaire."
> Screening for cancer is the primary cause of finding out you have cancer
I think very rigid predefined pay bands are very common for large companies, at least in Canada.
The fundamental problem is that businesses are focused on profits rather than employee satisfaction or producing quality products. Unless that is changed any regulations nibbling around the edges will just end up in a cat and mouse game between then businesses and the government.
"Duck typing unions"
What many companies with rigid pay bands do to handle this in practice, and what would undermine what you are proposing, is to continuously invent new titles/bands if the salary requirements change too quickly. I've seen companies that had hundreds of different titles for tech peoples for exactly this reason, creating new ones if the market salary moved too quickly.
It isn't just about how much people get paid. A policy of leveling up everyone automatically would massively increase the financial risk of the company, which has enormous downstream costs in terms of valuation, ability to borrow, etc.
Just for fun, I'm going to poke at this:
> ... [T]here is no practical way to budget for randomly giving most people large pay raises throughout the year
I think we can find examples of labor markets that do expose more "upside" to workers, and then see how the "downside" is handled in those instances. Contractors (1099 in the U.S.) comes immediately to mind... They typically make a lot higher rate (I'd guess around double although I often hear lower numbers, which I personally think is too low to make it a good deal) but must pay their full income tax (instead of half), their full health insurance, and are subject to be the first to be let go when the company needs to cut costs, i.e. higher risk of termination, so must be able to save for time between jobs.
"Boom" economies can drive labor prices very high. I think we've been seeing this in temporary nursing lately, where the wages go very high, especially if you're willing to travel or locate in remote places. Of course, the "boom" doesn't last forever, and eventually wages will stabilize at a lower rate. Note again that these temporary positions.
(So far it seems like the higher wages come with more "risk" put onto the laborer.)
I'm sure there are some even better examples.
It’s very rare to see companies actually doing this. They usually don’t at all, and when they do it’s often so vague that the bonus is basically entirely at the superior’s discretion with no tangible basis.
I think it’s fair that the people who risked the most to create the company get a significant chunk of the profit but why should employees be reduced to leftover crumbs in the best case and typically nothing at all beyond their poorly negotiated salaries that didn’t track inflation over the years?
In a good year there is profit to spread around anyway, bad years there is nothing extra.
I don’t know how that would work in our insane industry through where it’s a valid business model to hemorrhage money for years (decades even) without any real path to profitability. But I’m sure we can find a solution, as founders rarely live in poverty past a certain company size.
And I’m not talking about the joke that equity is in most cases where it’s barely worth the paper it’s granted on.
How does that work?
I don’t think this is a revolutionary idea, that’s how traders bonuses are paid, that’s how the variable part of CEO pay is calculated. Why not for employees too who frankly contribute the bulk of the work that generate said profits (and sometimes do so despite the managers and execs best efforts to lost the company money but get bonuses anyway)
At my startup, not a particularly rich one, we’d try and benchmark salaries for our key staff and adjust it to be competitive.
That's a long way of saying that inflation requires higher salaries and that employers are particularly hostile to matching inflation for their existing employees. Just because they're used to shoving their fingers in their ears and ignoring employees asking for money because things are getting expensive doesn't mean it's normal or okay.
> Before New York City enacted its own pay transparency law, lobbyists warned that they could create conflict in teams and remove incentives for employees to work hard.
That's the intent. People will get mad that they are not being paid the same as others doing the same or similar work. No more secrets.
> Activists and community leaders argue that the laws provide vital information to women and employees of colour who otherwise might not have the professional connections to know what kind of salary to negotiate for. Illinois, Oregon and Kentucky are weighing pay disclosure rules of their own.
I don't know what activist they found to argue that these laws are only for women and employees of color. That's a terrible take on these kinds of laws. They benefit everyone, everyone at some point or another has experienced a pay deviation from the norm, some people repeatedly, some people for most of their careers. This includes companies that routinely underpay compared to industry norms. This should even start to highlight how awful cost of labor is; someone based on their geography can be paid more than you simply for existing.
> But those most upset about the disclosures are the firms’ existing staff. Alan Goldstein, a New York-based executive recruiter, said that Wall Street human resource executives blamed the transparency for a wave of resignations after bonuses were paid out at the end of February.
That's quite a silly take on this situation. Maybe they should pay better, and have incentives that keep employees around since they can't rely on the mystery of the future anymore?
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I moved out of Texas because of a salary sharing thread on Twitter. I realized I made a third of what someone doing my same, if not lesser, job in San Francisco made. Asset prices are also higher in SF, so by the time these folks retire, they're sitting on a very fat nest egg. I've since left California, but I do side hustles that bring in some income to match what my SF salary used to be. If I hadn't seen that thread, I would've never known that the normal salary and benefits were so high there. It also helped me develop the opinion that cost of labor is an awful mechanism whereby we justify paying certain people more based on their geography, a geography that's often tied to exclusivity and high barrier to entry.
If business leaders are mad that the story is unraveling and they'll have to pay all or most of us fairly at some point then that's just tough luck I guess.