> 2. They want to avoid a hostile work environment where people are pissed off because they don't feel Jeff in sales should earn so much.

I've been in workplaces where everyone know each others salaries. Development shared sql database with the hr department so the "information leakage" was obvious. But nobody cared and it didn't lead to a hostile work environment.

I cant say knowing what your coworkers make never leads to hostile work environments. I can only say that I find it illogical that it would (why would it piss you off if someone negotiated a good deal?), have never heard of any work environment becoming hostile because of it or experienced it myself.