5 Reasons Why Wage Transparency Works

Wage transparency means everyone knows how much they and their coworkers make. We explain why this works.


Photo by Olga DeLawrence

Have you ever wondered how much money your coworkers make? Have you ever suspected you’re making more or less than the folks around you?

It makes sense why we want to know what our coworkers make. If we’re doing the same job, we want to know we’re getting paid as much as the person next to us. Likewise, we want to know that the folks above us aren’t making a disproportionate amount more than we are. At its best, keeping wages a secret probably means folks are gossiping about pay. But at its worst, wage secrecy can mean folks are paid differently based on race, gender, and other identities—and no one can prove it.

Wage transparency, or the practice of making all salaries open and available to all employees, is already used in places like Whole Foods, Sum All, and Buffer. Here are five reasons why you should consider implementing a wage-transparency policy—and how it might actually make hiring and training easier.

1. Wage Transparency Instills Trust

Technically, it’s illegal to prohibit employees from talking about their wages. The National Labor Relations Act states that employees have the right to discuss “concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Wages fall under this category.

And yet, pay secrecy is an implied policy at most companies. Money is already difficult for most folks to talk about—a study by Jobvite finds that only 29 percent of employees feel comfortable negotiating their salary—so imagine asking the person next to you what they make. And for most companies, pay secrecy is advantageous; if you can pay people less, and they have no way to measure their salaries against others, you can save more money and potentially hire more people.

However, if there’s any question about salary discrepancies, you can be sure your staff is talking about it. Questions around who is getting paid what can instill distrust in your staff, especially if there are no parameters for how pay is determined. On the flip side, being open about wages creates an opportunity to build trust amongst your staff. There are no looming secrets about money, and folks can focus on getting work done and not speculating on why the person next to them might be making more than them for equal work.

2. Wage Transparency Creates Fairness

Let’s face it—biases exist. Studies have shown that managers are more likely to hire and promote people with whom they identify or in whom they see themselves. Making objective decisions about a person’s capabilities or whether they’ll fit into the culture of a certain company is much more difficult than we’d like to believe—and we’re much worse at it than most of us care to admit.

Wage transparency removes the guesswork. Instead of wondering if you perceived one employee’s work experience as more valuable than another, wage transparency can help employers make unbiased decisions in terms of salary. You can set some basic pay rates; at Canadian-based MASS LBP, employees are paid one of two salaries, either as a junior staff member or senior staff member. Or, you can create checklists that trigger certain wage increases based on whatever criteria you see fit. At Buffer, pay is set based on industry standards, and then adjusted for experience and cost of living. And fairness is important because of the next point.

3. Wage Transparency Begins to Address Identity-Based Wage Gaps

The Pew Research Center shows that there are large gaps in wages between men and women and white and non-white employees. In 2017, women made 81 percent of what their male counterparts made, and black employees made 75 percent of what their white counterparts took home.

Although the Pew Research Center does look at a few other ethnicities to demonstrate further wage gaps, these results only reflect a small portion of potential differences between employees. Additionally, the Center for American Progress reports there are pay gaps between folks of differing sexual orientations, gender expressions, and differences between cisgender and transgender employees.

A lot of wage gaps come from inherent bias; studies show that employers perceive men as better qualified and perform better at certain work-related tasks. And that’s just looking at gender. By making wages transparent, employers can examine how their pay structure favors or hurts certain groups, and confront issues directly.

4. Wage Transparency Demands Accountability

If an employee asks you why they’re paid a certain wage or why they were passed up for a salary bump, you can probably point to myriad reasons—maybe they didn’t perform as well as they should have or their growth has slowed down substantially. That’s all well and good, but do you actually have the data to back it up?

Wage transparency demands that companies be accountable to their employees because there’s nothing to hide behind. If employees know how much everyone is getting paid, like they do at Whole Foods (which does not pay everyone the same amount but does publish every employee’s salary on their internal databases for all employees to view), that means employers have to know exactly why someone is getting paid more than someone else.

While this should be a good thing in itself, it also can protect companies from potential legal issues. Lilly Ledbetter famously sued her company after she was sent an anonymous letter informing her that she was making thousands less a year than her male counterparts—although she didn’t win, Congress passed the Lilly Ledbetter Fair Pay Act shortly thereafter.

5. Wage Transparency Makes Things Easier for Employers

If none of these arguments compels you, then perhaps this one will: Wage transparency makes things easier. You don’t have to waste time negotiating wages or figuring out how much money you have to give a new role.

If you decide to adopt a policy that pays everyone the same amount for a particular role, then all you have to do is set a wage. If you’d like to reward certain attributes, you can create a matrix that includes a number of factors, like barista experience or prior work history, and a simple Excel sheet can help you determine what salary to offer a new hire or an existing employee. Regardless, wage transparency can provide an easy way to determine wages without any guesswork and without any bias.

In 2019, we want to explore themes of empowerment, fairness, and the betterment of workplaces. Along with sharing stories about how to make working conditions more equitable, we want to engage with our readers on a deeper level—starting right now! Tell us about your experiences or ideas about wages—please email ashley@baristamagazine.com with your stories!

About Ashley Rodriguez 413 Articles
Ashley is the Online Editor for Barista Magazine. She's based in Chicago. If you want to share a story or have a comment, you can reach her at ashley@baristamagazine.com.