There have been a few studies on the systemic effects of wage transparency with respect to average pay. They tend to indicate, as in this paper [0] from 2021 for example, that wage transparency suppresses average wages over time. The proposed mechanisms for the wage suppressing effects seem eminently plausible. I haven't seen much evidence that it would increase average wages, either anecdotally or in studies.
"We find that in markets with high individual bargaining power (low unionization rates), pay transparency mandates lower average wages around 2%, as we find in the context of the U.S. private sector. In markets with low individual bargaining power (high unionization rates), pay transparency mandates have little to no effect on wages."
This seems to not be an argument against pay transparency so much as it's an argument for unionization. Transparent prices in any market are important for market efficiency, and that's no less true for the labor market. The mechanism for decreasing wages is "employers resist issuing individual raises because they think everyone else will want a raise too", and that's a cultural thing that will pass in a few generations. I have worked on teams with plenty of people who made more than me, and I didn't take it personally because I knew full well how brilliant and hardworking they were.
With transparency, the information may not be able to capture the differences in expertise of each worker - like "someone who has delivered x products and is well versed in techniques a, b, and c". The market will just show a blanket designation giving an impression of fungibility (which unenlightened management already have) and the tendency will be to push rates down to the lowest common value.
I don't have any evidence for this, but the logic is not that "Everyone's wages go up." Rather, it's, "The folks at the lower end of the wage spectrum gain negotiating power to ask for more."
Imagine if, in addition to income, you could also lookup the debt level and net worth of anyone you know.
Are your neighbors driving a fancy car just because they're leveraged up to their eyeballs in mortgage debt? Would people change their buying habits if their net worth was public. Is there any point owning ostentatious possessions if everyone knows your debt level?
I think some nordic countries come close to that by allowing anyone to look at tax information by going into an office in person. (people availing of this service is also public knowledge)
> Is there any point owning ostentatious possessions if everyone knows your debt level?
Perhaps it seems safe to assume not, but it couldn't be further from the case. First of all, it's not necessarily the case that overleveraging so you can have possessions to enjoy is enjoyable.
Especially at the higher end of the earning, this can be very apparent. $20m underwater and living in a mansion. Am I really toughing it out? Remember when the Trump said a homeless guy has more money than him. Yet he's pooping on the street and not a golden toilet.
The truth is that people never care how much you really earn it. Our society would be totally different if so. Yeah, implied with the respect is that you earned it, but people don't care.
People either "like" you because they can share some of it, imagine themselves like you, or they're envious of your stuff. If you earned it that's just a cool bonus.
>Finally, I’m willing to bet a tenth of my monthly pay that should wage transparency become mandatory, the overall salary range will fall throughout the industry (at least in the short term), as this is how organisations generally deal with forced initiatives.
I would like to see how this would all play out. Generally people know roughly what the market is paying, and unless desperate, people probably aren't inclined to pursue roles paying far less than a) they are currently getting, b) the market is generally paying. So assuming the industry drops rem in lockstep, people stick to their current role, or they wait for an org to need talent enough to raise the pay on offer. The market evens out again eventually, surely ("at least in the short term"). That said, I'm a casual observer and I'm speculating wildly. Did find the "aw, poor HR" moments in the article amusing though.
Inflation will eat the pay of people sitting on a good check because the company will give terrible updates to the pay knowing there isn't a good rock to hop to.
...Huh. Never expected a Malaysian article to land on HN's 1st page.
Considering the US/EU-centric userbase of this site & its consequent effects on links submitted here, I didn't expect one from my country making it here.
But yeah, further transparencies into wages/salaries will help everyone to make better judgements & decisions when it comes to wage/salary negotiations.
This is one of those issues where I have terribly, terribly little sympathy for the businesses. "It will cost the business more" "people might find out they're underpaid" "it'll bring down average comp!!" (Why? By what mechanism? All the author of the article does is bet 10% of his salary.)
In the US, employment is ridiculously one-sided in the benefit of the employer and this has only gotten worse as inflation has returned in force. The fact that they're throwing up their hands and complaining "think of the poor capitalists!!" just makes me shake my head.
When I worked at a state university, every salaried employee's pay was public information. You could just look up anybody and see how much their salary was. I never paid a lot of attention to it but some people did and seemed to obsess over who got paid how much in comparison to themselves.
They paid pretty poorly compared to what many in the tech sector can make, but it was low stress and you had a lot of PTO and decent other benefits.
Union wages are known by all their members. And somehow the world hasn't ended.
Transparency seems reasonable to me. A good first step.
For the game theory minded, highest recommendation for the book The Logic of Collective Action. Explains the free rider problem, debunking the prevailing economic folk theories of the day (1965).
A16Z just released a podcast about this. [1] They explore the nuances of what the rules require, and how various types of companies are responding to them.
This is pretty useless. When enforced you end up with ranges like 80k - 180k "depending on experience" which tells you nothing. What I do is ask the recruiter right away when they reach out, if they won't give me at least a narrow range I'm unlikely to continue the process.
I don't give a care how much more difficult it is for the employer. It's unambiguously GOOD for the applicant to know the expected compensation before applying. If you're opposed to wage transparency, I can only assume it's for manipulative & dishonest reasons.
You do realise that it's possible to believe both "the world would be better if everybody did X" and also believe that "the government should not have the power to mandate everybody does X"?
People are opposed to being valued the same way that mediocre people are. Like, I don’t talk about money until the interview process is over. That way I have the leverage (concrete examples of performance) that I need to negotiate fairly.
Employers now can just race to the bottom with accurate info on their competition.
It's not just HR. As a consultant, wage "transparency" is just price fixing with the effect of mean reversion that disadvantages applicants. The underlying pretext of these anti-negotiation activists is that the people looking for jobs lack skills, agency, and grit, and work on a tenuous 19th century narrative where job seekers were essentially beggars going hat in hand for a wage in exchange for exploited labour.
If you believe them, you've been taken and the only thing being exploited is perhaps your ignorance of an entire genre of $3.99 paperbacks on how to negotiate a basic wage. If you're really serious about anti-negotiation, there's nothing anyone can tell an ideologue other than that gaslighting poor people is despicable.
> and work on a tenuous 19th century narrative where job seekers were essentially beggars going hat in hand for a wage in exchange for exploited labour.
...Except that is still more or less the case for the vast majority of workers. Most employers won't even wait for you to finish your negotiation spiel before kicking you out and moving onto the next applicant.
Most people, at least in the US (which is seemingly the focus), are not working in an industry where workers have any real room for negotiation. You might be able to get a dollar or two per hour more if you really impress the hiring manager, but that's not happening for the $10/hr kinds of jobs that so many people work. And if you try to squeeze the employer for more, they probably have a stack of applications many of whom will take whatever the employer gives them because their alternative is getting paid nothing at all.
Im sympathetic to the price fixing concerns. But publishing wages seems like a detail of executing a price fixing scheme (which can be executed other ways currently). I dont see how it encourages price fixing. It seems to me the forces discouraging price fixing include ethical obligations, competition, and threat of law. I dont see how wage transparency overcomes any of these. You would still need to be an asshole willing to break the law with the threat of a competitor undercutting you.
What changed that suddenly gave workers the upper hand in negotiating with company management? The whole “hat in hand bit” seems like an effort to obscure the obvious fact that individual workers still lack meaningful power in negotiating wages.
[+] [-] jandrewrogers|2 years ago|reply
[0] https://www.nber.org/system/files/working_papers/w28903/w289...
[+] [-] kibwen|2 years ago|reply
"We find that in markets with high individual bargaining power (low unionization rates), pay transparency mandates lower average wages around 2%, as we find in the context of the U.S. private sector. In markets with low individual bargaining power (high unionization rates), pay transparency mandates have little to no effect on wages."
This seems to not be an argument against pay transparency so much as it's an argument for unionization. Transparent prices in any market are important for market efficiency, and that's no less true for the labor market. The mechanism for decreasing wages is "employers resist issuing individual raises because they think everyone else will want a raise too", and that's a cultural thing that will pass in a few generations. I have worked on teams with plenty of people who made more than me, and I didn't take it personally because I knew full well how brilliant and hardworking they were.
[+] [-] gamblor956|2 years ago|reply
This study is a great example of p-hacking and a very poor example that wage transparency affects average pay.
For a counter-example: wage transparency has resulted in runaway salary inflation in athletics, entertainment, tech, and executive salaries.
[+] [-] kaycey2022|2 years ago|reply
With transparency, the information may not be able to capture the differences in expertise of each worker - like "someone who has delivered x products and is well versed in techniques a, b, and c". The market will just show a blanket designation giving an impression of fungibility (which unenlightened management already have) and the tendency will be to push rates down to the lowest common value.
[+] [-] P_I_Staker|2 years ago|reply
[+] [-] Zetice|2 years ago|reply
[+] [-] andersrs|2 years ago|reply
[+] [-] extraduder_ire|2 years ago|reply
[+] [-] P_I_Staker|2 years ago|reply
Perhaps it seems safe to assume not, but it couldn't be further from the case. First of all, it's not necessarily the case that overleveraging so you can have possessions to enjoy is enjoyable.
Especially at the higher end of the earning, this can be very apparent. $20m underwater and living in a mansion. Am I really toughing it out? Remember when the Trump said a homeless guy has more money than him. Yet he's pooping on the street and not a golden toilet.
The truth is that people never care how much you really earn it. Our society would be totally different if so. Yeah, implied with the respect is that you earned it, but people don't care.
People either "like" you because they can share some of it, imagine themselves like you, or they're envious of your stuff. If you earned it that's just a cool bonus.
[+] [-] wenebego|2 years ago|reply
[+] [-] unknown|2 years ago|reply
[deleted]
[+] [-] 000ooo000|2 years ago|reply
I would like to see how this would all play out. Generally people know roughly what the market is paying, and unless desperate, people probably aren't inclined to pursue roles paying far less than a) they are currently getting, b) the market is generally paying. So assuming the industry drops rem in lockstep, people stick to their current role, or they wait for an org to need talent enough to raise the pay on offer. The market evens out again eventually, surely ("at least in the short term"). That said, I'm a casual observer and I'm speculating wildly. Did find the "aw, poor HR" moments in the article amusing though.
[+] [-] galangalalgol|2 years ago|reply
[+] [-] EatingWithForks|2 years ago|reply
[+] [-] x-complexity|2 years ago|reply
Considering the US/EU-centric userbase of this site & its consequent effects on links submitted here, I didn't expect one from my country making it here.
But yeah, further transparencies into wages/salaries will help everyone to make better judgements & decisions when it comes to wage/salary negotiations.
[+] [-] atomicnumber3|2 years ago|reply
In the US, employment is ridiculously one-sided in the benefit of the employer and this has only gotten worse as inflation has returned in force. The fact that they're throwing up their hands and complaining "think of the poor capitalists!!" just makes me shake my head.
[+] [-] SoftTalker|2 years ago|reply
They paid pretty poorly compared to what many in the tech sector can make, but it was low stress and you had a lot of PTO and decent other benefits.
[+] [-] specialist|2 years ago|reply
Union wages are known by all their members. And somehow the world hasn't ended.
Transparency seems reasonable to me. A good first step.
For the game theory minded, highest recommendation for the book The Logic of Collective Action. Explains the free rider problem, debunking the prevailing economic folk theories of the day (1965).
https://en.wikipedia.org/wiki/The_Logic_of_Collective_Action
TLDR: Collective bargaining keeps everyone honest.
[+] [-] wmidwestranger|2 years ago|reply
[+] [-] vore|2 years ago|reply
[+] [-] gnicholas|2 years ago|reply
1: https://podcasts.apple.com/us/podcast/salary-transparency-cl...
[+] [-] totallywrong|2 years ago|reply
[+] [-] naruhodo|2 years ago|reply
[+] [-] rychco|2 years ago|reply
[+] [-] made_this_acct4|2 years ago|reply
- some roles don’t really have a budget, salary will depend on applicant and can range a lot
- forcing a range means these ranges will skew lower so higher performing people will lose out and average salaries will go down
[+] [-] Sophistifunk|2 years ago|reply
[+] [-] BlackEngineer|2 years ago|reply
Employers now can just race to the bottom with accurate info on their competition.
You’ve played yourself.
[+] [-] diego_sandoval|2 years ago|reply
Only if the expected compensation is referential and doesn't have to be honored.
If the expected compensation has to be honored, then you have no way to negotiate a salary higher than the upper bound or lower than the lower bound.
[+] [-] joshSzep|2 years ago|reply
[+] [-] toomuchtodo|2 years ago|reply
[1] https://www.cnbc.com/2023/06/21/more-than-25percent-of-us-wo... ("More than 25% of U.S. workers are covered under pay transparency laws—that could soon be near 50%")
[2] https://www.hrdive.com/news/pay-transparency-law-tracker-sta... (A running list of states and localities that require employers to disclose pay or pay ranges)
[+] [-] TylerE|2 years ago|reply
[+] [-] motohagiography|2 years ago|reply
If you believe them, you've been taken and the only thing being exploited is perhaps your ignorance of an entire genre of $3.99 paperbacks on how to negotiate a basic wage. If you're really serious about anti-negotiation, there's nothing anyone can tell an ideologue other than that gaslighting poor people is despicable.
[+] [-] genocidicbunny|2 years ago|reply
...Except that is still more or less the case for the vast majority of workers. Most employers won't even wait for you to finish your negotiation spiel before kicking you out and moving onto the next applicant.
Most people, at least in the US (which is seemingly the focus), are not working in an industry where workers have any real room for negotiation. You might be able to get a dollar or two per hour more if you really impress the hiring manager, but that's not happening for the $10/hr kinds of jobs that so many people work. And if you try to squeeze the employer for more, they probably have a stack of applications many of whom will take whatever the employer gives them because their alternative is getting paid nothing at all.
[+] [-] nonethewiser|2 years ago|reply
[+] [-] bglazer|2 years ago|reply