Pay transparency: Say what you pay

    Medium US
    Business Spotlight 12/2023
    Two people playing cards, not disclosing their hand full of cards with different dollar amounts
    © Georg Lechner
    Von Talitha Linehan

    Until recently, a question like “How much do you get paid?” would have been widely considered taboo. Times are changing, however, and younger workers and women, in particular, have been calling for greater pay transparency at work. An increasing number of people have started sharing their salaries, in person and online, and putting pressure on employers to be more open about how much workers are paid and how salaries are calculated. The hope is that more transparency about pay will lead to more income equality and trust in the workplace.

    A 2022 study by the analytics company Visier, called the Pay Transparency Pulse Report, found that 79 percent of U.S. employees want some form of pay transparency — and 32 percent even want total transparency, in which all employees’ salaries are publicized. Openness about pay has already become a factor in an employer’s appealAttraktivitätappeal in the job market: More than two-thirds of employees say they would leave their company to work for one with greater pay transparency, even if the pay were the same. Andrea Derler, principalDirektor(in)principal of researchForschungresearch and customer value at Visier, said in a statement that the data signaled “a significant shiftWandelshift from the traditional belief that pay is a taboo subject in our personal and professional lives.”

    In response to the pay transparency movement, several laws have been enact sth.etw. erlassenenacted in the U.S. requiring employers to include salary rangeGehaltsspannesalary ranges in job advertisements. Colorado was the first, in 2021. Since then, similar laws have been created, in New York, California and Washington. On top of this, companies in the U.S. and many other countries have implemented their own policies on pay transparency, with some going as far as to publicize the salaries of all their employees.

    Over half the workers in the U.S. are subject to pay secrecy

    Changing a culture of secrecy

    The pay-transparency trend represents a dramatic shift in workplace culture, which for decades has maintain sth.etw. wahrenmaintained an atmosphere of secrecyVerschwiegenheit; auch: Heimlichtuereisecrecy around pay. A 2021 report by the Institute for Women’s Policy Research (IWPR) said almost half of U.S. employers discouraged or ban sth.etw. verbietenbanned the sharing of salary information, and many had a formal pay-secrecy policy, even though such policies are illegal. The 1935 National Labor Relations Act protects the right of employees to discuss their pay but, as Shengwei Sun, IWPR seniorhier: in leitender Stellungsenior research associatewissenschaftliche(r) Mitarbeiter(in)research associate, told the BBC, this law is rarely enforce sth.etw. durchsetzenenforced: “We still find that over half the workers in the United States are be subject to sth.etw. unterliegensubject to pay secrecy.”

    Beyond the U.S., things are changing, too. In the U.K., salary ranges are often included in job descriptions, providing a basis for negotiationsVerhandlungnegotiations. In March 2022, the British government started a pay transparency pilot program, aimed at enforcing public salary information.

    This is nothing new in Scandinavian countries, where policies of transparency mean other people’s salaries are publicly accessiblezugänglichaccessible. In Sweden, Finland and Norway, citizens’ tax return(Lohn-) Steuererklärungtax returns are available to view upon request with few restrictionEinschränkungrestrictions. Despite this, however, it’s important to note that the gender pay gapLücke; hier: Gefällegap still exists. In fact, as recently as 2021, the gap was wider in Sweden (11.2 percent) and Norway (14.3 percent) than in Romania (3.6 percent), for example, according to data from Eurostat.

    Transparency helps

    nonethelesstrotzdemNonetheless, there is no doubt that biasVoreingenommenheitbias, whether conscious or unconscious, contributes to pay inequality around the world. In the U.S., data from the Census BureauStatistikamtCensus Bureau shows that, in 2021, white women in America earned 82 cents for every dollar that men earned, while Black women earned 63 cents, and Hispanic and Latina women just 58 cents for every dollar that white men earned. Despite rising awareness of gender and minority-related pay gaps, they’ve been very difficult to eliminate. Many managers believe that transparency is probably the best protection against various forms of bias.

    However, practical experience suggests that pay transparency may be only the first step in eliminating the pay gap. In 2013, in the hope of achieving fairness and pay equality, the social media startup Buffer published the salaries of all of its employees online, along with the formulaFormelformula used to calculate salaries. Two years later, however, the company analyzed its data and discovered that a gender pay gap of almost $10,000 still existed. Apart from Buffer’s two founderGründer(in)founders, the average yearly salary of its 57 male employees was $98,705, while the average salary of its 24 female employees was $89,205.

    The issueProblemissue wasn’t that women were being paid less than men to do the same job, but that over 61 percent of the male employees were at an “advancedhier: höheradvanced” level, compared with a little more than a third (37.5%) of the female employees. In discussing the numbers with the business magazine Fast Company, Buffer’s head of communications and content, Hailley Griffis, said that bias might also have played a role in determining salaries, which were based in part on an applicantBewerber(in)applicant’s level of experience. “We realize that’s a little vagueunspezifisch, unkonkretvague, which is why we’re working hard to make ‘experience’ more clear and defined,” she said. After employing more women in higher-paying roles and ensure sth.etw. sicherstellenensuring they advanced within the company, Buffer announced last year that its gender pay gap had shrinkzurückgehenshrunk to just $568.

    Pay transparency has a positive impact on employees’ perception of trust, fairness and job satisfaction

    Be prepared!

    Studies have found that pay transparency has a positive impact(Aus-)Wirkungimpact on employees’ perceptionWahrnehmungperception of trust, fairness and job satisfaction around the world, and that people are more likely to apply for sth.sich für etw. bewerbenapply for rolehier: Positionroles that include salary ranges. However, in reveal sth.etw. offenlegenrevealing how much they are offering potential new employees, companies risk some negative falloutNachwirkung(en)fallout — including tensionSpannung(en)tension in the workplace, losing employees who feel they are being underpaid and even legal and reputational damage. After publishing the salaries of its highest-paid stars for the first time, in 2017, the BBC was accuse sb. of sth.jmdm. etw. vorwerfenaccused of gender bias because only a third of those on the list were women, while the seven highest earners were all men. Although the BBC had to accept the justifiable criticism, creating that transparency was the first step to rectify sth.etw. berichtigen, behebenrectifying the inequality.

    The advice to employers from those who have implemented some form of pay transparency, either out of choice or obligationVerpflichtungobligation, is to be prepared — by making any necessary adjustmentBerichtigungadjustments to ensure pay equality, for example, and training managers to answer pay-related questions from employees. “Even if you think laws in New York City or Rhode Island or Colorado or California don’t apply to sb.für jmdn. geltenapply to you, just know that these are the first of many to come,” Cassandra Rose, head of people at the lifestyle benefits marketplace Fringe, told CNBC. “They’re going to put pressure on other places. I advise businesses get ahead of it before it’s a requirement you have to race against sth.hier: etw. unter Zeit- druck erfüllenrace against.”



    Since 2017, Germany’s Pay Transparency Act has aimed to close the gender pay gapLücke; hier: Gefällegap by allowing employees of companies with 200+ staff to know what their colleagues earn. Companies with 500+ employees must regularly review sth.etw. überprüfenreview pay structures and publish details on equal-pay policies.

    The Federal Statistical Office of Germany found that, in 2021, men still earned around 18 percent more than women, which is less than the 23 percent in 2006.

    Across the countries of the EU27, men’s average hourly earnings were 12.7 percent higher than women’s in 2021 — over six weeks of salary. That’s why European Equal Pay Day, which was on November 15th in 2023, marks the day when women symbolically stop being paid for that year.


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