[AmericanChopper]

Salary transparency, like all levelling mechanisms, pushes salaries down. Your highest salaried team members are simply replaced by contractors as they realise that their remuneration is now tied to the impression it gives to their colleagues rather than the value of their own labor.

[JohnCurran]

It seems to me, in my uninformed layman opinion, that it would do the opposite. Maybe it would force the outliers down but perhaps bring the average up.

These are two common scenarios I see:

- Two employees at the same level on the same team. One is paid $X higher than the other. Employee one asks for raise based on the fact they do the same job as employee two

- New hire is paid $X more than member of team who has been there receiving meager raises yearly. They can point to the new hire and request $Y more due to their experience

That said, this is conjecture and not backed by anything. Are there published works on salary transparency = lower pay for employees?

[hwbehrens]

> These are two common scenarios I see:

There is a 3rd scenario that I've occasionally seen: Two employees with the same title on the same team. Employee One is unhappy because they are paid 10% less than Employee Two, despite same experience and title. Employee Two ALSO unhappy because in practice they do 50% more work than Employee One for 10% more pay.

I still don't see the parent's connection of transparency to lower pay, but there is a rich scientific literature on the concept of "Comparison is the thief of joy" -- I hypothesize that turnover rates might positively correlate with transparency because they could promote intra-team competitive feelings.

The exception would be if there were a rigid structure that you know going in, similar to how e.g. government pay scales work. Since you know going in that the only input is seniority, you won't care that exceptional work is not rewarded because that was made clear from the get-go, and if that would have bothered you you wouldn't have accepted the offer in the first place.

The natural counterargument to that is that if the only input to compensation is seniority, then there is reduced incentivization for performing "above and beyond", possibly cultivating a culture of mediocrity.

It also would promote pay equity, however, since e.g. employees' implicit biases and social conditioning would not come into play under subjective evaluations.

[Gareth321]

While I support pay transparency on principle, I have never seen it work. In practise, no two employees are ever equal. Even those with the same years of experience, the same qualifications, and the same roles. One might be happy to work late. The other might be happy to pick up the phone on weekends. One might prefer working alone. The other might play better with colleagues. One might offer to take on more projects. The other might not, but they have better attention to detail. The differences go on ad infinitum. There is no "objective" way to determine the market value of each of these two employees. The best we can do is let each business make subjective judgments of each employee. We know this is far from perfect, but it could be more fair than paying two very different people the same wages just because they studied the same thing at university and worked in the industry for the same length of time. One of them will be contributing more to the business bottom line - sometimes significantly so - and they probably know it. They'll leave if they're paid the same as their lesser-performing colleague.

[AmericanChopper]

You can observe it by counting the contractors in any company that has salary bands, or transparency, or any other similar system. Very few high performing employees are prepared to accept that their remuneration is being constrained to prevent the lower performing employees from getting jealous. They are strongly incentivised to either leave or become contractors, increasing their remuneration even more. Only the average performing and under performing employees readily accept such an arrangement, because they are either unaffected by it, or benefit from it. You don’t need to do a study to figure out that people avoid things that are detrimental to their own interests.

[rsavage]

This is only true if people are underpaid in their salary bands -- which certainly can happen.

However, it doesn't have to. We are still small with our experiment, but we pay 95% percentile in our market, plus provide additional benefits well above the norm.

We have no issues hiring and retaining high performing staff because we pay as much or more than they would get elsewhere in the local market.

[halper]

We don't even need to speculate about it. In for example Sweden, everyone's tax return is public information. You just call the tax office and ask how much income someone declared last available year.

[willio58]

Do you have empirical evidence of this? I struggle to understand how salaries being in a black box helps your chances getting paid more as an employee.