Pay Discrimination Begins With Bias, Is Abetted by Pay Secrecy

While I don't COMPLETELY disagree with your premise (though I do mostly), your example is completely flawed.

In your example of Jack and Jill, how do you find the employer at fault? Jill is clearly at fault for trying to position herself as the clearly better candidate. Its called negotiation and it happens every day in the business world. Its not discrimination, though I suppose that someone could call it discrimination against the timid.

Yes, Jill was a bargain for the employer. She allowed herself to be the bargain. This exact same situation could be reversed, with Jack accepting what is offered and Jill negotiating a better salary. Jill would be congratulated and Jack would be made fun of for being too weak or bashful to ask for more.

I agree with the need to remove the 180 day reporting period, but the basis of your entire argument is so flawed that it can't be taken seriously. If you're going to use an example, you've got to make it apply.

Same point. Your example assumes that salary is only a function of qualifications. But labor market considerations often trump other factors. Just look at associates' pay in law firms; the annual pay hikes have nothing to do with qualifications and everything to do with keeping up with the big NYC firms. Another point: employees often have quite subjective views of their value to the enterprise. Management typically is the only party in a position to sort out the thoroughbreds from the mules. Do we really want to exacerbate intra-office tension by letting everyone know that employee x is receiving (legitimate) premium pay? Seems like that is an invitation to bias suits. The better solution is for the time period to be lengthened, and for the clock to start running when the employee reasonably should have known about an allegedly discriminatory act.

Same point. Your example assumes that salary is only a function of qualifications. But labor market considerations often trump other factors. Just look at associates' pay in law firms; the annual pay hikes have nothing to do with qualifications and everything to do with keeping up with the big NYC firms. Another point: employees often have quite subjective views of their value to the enterprise. Management typically is the only party in a position to sort out the thoroughbreds from the mules. Do we really want to exacerbate intra-office tension by letting everyone know that employee x is receiving (legitimate) premium pay? Seems like that is an invitation to bias suits. The better solution is for the time period to be lengthened, and for the clock to start running when the employee reasonably should have known about an allegedly discriminatory act.

Have to agree here with the other posts. It's difficult to ascertain from your example, how both individuals would benefit if they knew what the position paid. In fact in many instances many job postings do list a salary range so for these positions, individuals who come in, know where they could fall. But this is a market economy and one of the benefits for all individuals who seek a position is that they have the opportunity to negotiate and seek the best possible pay. Not all economies offer that.
Regardless, the issue at hand is this ridiculous judgment. I'm trying to find it in detail, or if anyone has a good summation, I'd appreciate it. But the grounds the Supreme Court overturned this, seems so pointless, it leaves you scratching your head and wondering what were they thinking.

Part of doing your job well is knowing what you are worth on the open job market. I encourage people who work for me to go on job interviews and keep abreast of what they make. I apply the same rules to myself. I can bet the men in my office make more than I do in most cases. If I chose to get more assertive about it, I could probably change it. It would take more energy than I am willing to give.

Hey, gentlemen, and welcome to WiP. As for the argument, which you find flawed: I find the employer at fault in my Jack/Jill fable for fostering a culture of secrecy, in the hopes that one worker wouldn't learn she made less than another. You're right--that could go for either gender. However, research has shown that women are far less likely to negotiate salaries. We sisters need to learn how to do that. But in the meantime, what if employees began to voluntarily disclose our own salaries to each other? Wouldn't that empower all of us? That's all I'm sayin'.

Sorry Lisa,

Finally, I found something to be in disagreement with you on that:)
To me, the salaries should not be revealed because:

1) People usually compare themselves from their view points and it is not a good comparison all the times, but in the end this is the employers who should pay and evaluate you based on your performance and their standards. Thus, knowing who earns how much is discouraging- because of personal narrow-minded comparisons-

2) That's a good thing that we learn to negotiate. If someone earns more based on his/her skill in just negotitation, then he/she has one extra skill and is deserved to be paid extra for that:)

I think Lisa's argument is spot on. In my company, we used to have secrecy around salaries, and it was largely because there had been conditions which led to some employees earning more than others. But we recently opened the books up and, furthermore, let the employees decide for themselves if their salaries are correct. For our locale, our salaries are competitive but they also needed to be fair internally.

If someone wants more pay, they don't justify it to me - they justify it with their co-workers. Ironically, it makes things a lot easier to work with, but it should be worth noting that it leads to a requirement of total openess within the company - something that isn't so common in a private enterprise.

We're not unique in how we do this. Look around - there are more and more organizations that believe in transparency throughout. Secrecy in salaries and other things in the business world is going the way of the do-do bird.

Personally, I think that some women should demand release of salary/promotion information at their companies, then sue based on the recent Court decision If employees only have 180 to file suit after a specific discriminatory act, they need access to the information that would allow them to determine whether discrimination has occurred. With hacks like Alito, Thomas, and Scalia on the court, they would probably lose --- but the sheer absurdity of the recent decision would be exposed for all to see.

I appreciate the fact that you actually replied back to the comments. I'm surprised and very impressed. Thank you.

I still tend to disagree with you, but for specific reasons.

#1) Salary doesn’t tell the entire story of situation. For example, in your Jack and Jill scenario, you make the statement that they both have “equal qualifications.” Jack makes more than Jill, she sues because it’s obviously discrimination. Their resumes are identical, both hold MBA’s from Harvard Business, both have 15 years experience in the field, both have impeccable references. Jill knows their resumes are identical, so she sues. Does the lawsuit have merit? Well, maybe but maybe not. But releasing salary information doesn’t tell the whole story. How much value do you put on people skills? How much value do you put on personality? How much value do you put on having the guts to ask for more money? On the ability to sell yourself to the company? A resume doesn’t tell the whole story. I’ve hired over 150 people in my career and sifted through thousands of resumes. In general, I can tell whether someone will get hired or not within the first two minutes of an interview. We are constantly selling ourselves in business and the ability to do that is something many business look for.

#2) The risk to the company would simply be too great. What if the competition came trying to lure their talent away? It takes time and money to recruit, train and develop good employees. If a company hires and trains someone, the competition gets the salary list (from some disgruntled employee posting it on the Internet) and makes offers to those employees, it could be very cost effective for the stealing company to pay more for the employees, because they don’t have to sink those dollars into development. They get someone ready to hit the floor running, just because they come in with a little more money.

#3) Ok, so now let’s take that same salary list that’s on the Internet from Bob in the mailroom that got fired for smoking pot on the job. Telemarketers, identity thieves, house burglars, credit agencies…the list goes on of the people that would want that list. And I don’t want them having it. Why would I want a telemarketer knowing what I make? I get enough calls interrupting my dinner. Knowing that I’m within the financial demographic for their product, makes it more likely they’re going to bug me. And if you’ve ever been a victim of identity theft, then you’ll know you don’t want any of your personal information out there.

#4) The only way that this could be done is through legislation, requiring it of ALL companies. We don’t need more Big Brother in our workplace. If someone has a problem with the amount that they make, well, then “man up” and do something about it. Ask for a raise. Scout the competition. Find a way to make yourself more critical, that the company can’t do without you.

I’m not saying that pay discrimination doesn’t happen. I’m sure it does for all the wrong reasons: gender, religion, race, etc. If someone doesn’t get paid as much just simply because they are a woman, or just simply because they are Buddhist, then that is reprehensible and I hope they take the company to the cleaners in court. But requiring companies to make public how much I make…I just don’t buy into it, for a myriad of reasons.

Very good article.

Here is an excerpt from my blog, Cenek Report, dealing with pay secrecy.

Government officials and the top highest paid executives in a publicly traded corporation have at least one thing in common – their pay is a matter of public record!

Pay gurus, including Ed Lawler of USC’s Center for Effective Organizations, have long argued that keeping pay secret does more harm than good. They cite research results that suggest people have a tendency, in the absence of public information to the contrary, to underestimate or to overestimate the pay of others. Limited empirical research suggests that pay secrecy leads to lower employee motivation and higher dissatisfaction. Some however, including Gary Charness and Peter Kuhn at the University of California, Santa Barbara, have also argued the opposite: equity perceptions do not appear to influence the expenditure of effort. Other compensation experts have argued that readily accessible pay information unintentionally fuels a continuous spiraling of executive pay because many organizations chase the 50th percentile for total direct compensation (TDC). Plus, few executives like to know that they are being paid less than their counterparts at a competing firm.

There is another weighty argument for releasing pay information. It increases (though does not completely guarantee) equitable distribution of pay. Managers will be less apt to overpay favorites or “non-rock the boaters,” if they realize that their pay decision will be scrutinized by others within the organization. Pay transparency might also help to reduce pay discrimination based on gender.

robert edward cenek, RODP
www.cenekreport.com
Uncommon Commentary in the World of Work

"But releasing salary information doesn’t tell the whole story. How much value do you put on people skills? How much value do you put on personality? How much value do you put on having the guts to ask for more money? On the ability to sell yourself to the company? "

First off, in the hypothetical the assumption is that Jack and Jill are equally qualified in all ways -- the only difference is that Jack demanded more money. (And I find it hard to believe that most companies would see agressiveness solely in pursuit of narrow self-interest as a desirable trait.)

More importantly, it is precisely these kinds of "intangibles" you mention that companies use to justify discrimination. If the man is more agressive, then "agressiveness" becomes the desired quality. If the woman is more agressive, then suddenly "too agressive" is the label placed on her. If the woman does her best work independently, the company decides it wants to promote a "team player." If the woman excels at teamwork, the desired trait become "ability to work independently."

One need look no futher than the US Attorney scandal for a real life example of how employers will use ex poste facto reasons to justify employment decisions that are unrelated to actual job performance. Employers do what they want, and come up with the rationale after the decision -- and this is the mechanism that drives institutional discrimination.

Let me log a vote in defense of Lisa. Adhering to this irrational cult of pay secrecy accomplishes little except to transform salary negotiations into a high-stakes game of poker where the House usually wins.

However, I don't think simply encouraging a culture of salary disclosure within an organization is enough, unless it leads to a system where pay scales, are based on logical criteria that employees can trust are being respected at all times.

Having worked in settings where pay scales are set (based on task descriptions plus credentials and experience) according to collective agreements as well as in settings where the onus is entirely on the employee to negotiate his/her own pay, I can say that while the former system is restrictive and not always efficient compared to the latter, it is also infinitely more transparent, gives employees confidence that they're being trated fairly, and discourages employer abuse.

Unfortunately, I get the impression that as we continue to move farther and farther away from a job market characterized by collective bargaining and large employers, pay fairness will relegated to history as a quaint relic of the 20th century idealism.

ok, ok, I've heard both sides of the argument. I vote for transparent salaries. Let everyone know what everyone else makes and the chips fall where they may.

All hail public debate.

You guys are great. Does anyone have smarter blog readers than I? I think not. You put me to shame with your cogent arguments and thoughtful writing.

Tom, I take your point(s). But what it all says to me is that pay in our market economy is totally subjective. Even qualifications aren't black and white; who's to say my colleague learned more at Princeton than I did at Rutgers? And how to measure output, value, productivity?

The way things go now, Gordon Gekko was right: greed is good. In any case, greed wins, at least at the negotiating table. Maybe the best thing is for us to demand outrageously high pay, then let our bosses say yea or nay. Can't hurt to ask.

Lisa, there will never be equivalent education and experience at any level of a career, so your example is not only hypothetical, it is impossible. Even new college graduates will have different grades in courses relevant to the job, different activities, different roles, and different work experiences up until that time.

I'm in the tech industry, and I often see jobs listed that require very specific amounts of experience in very specific technologies. I pass those by; I do so much more than just fill a slot. But that's what pay transparency will turn all of us into - nothing more than slot fillers; this amount of money for that very exact set of skills. My pay has to satisfy me, and no one else.

Jill and Janice have identical jobs.
What if Jill (15 years experience) was hired one year and Jack (2 years experience) replaced Janice (20 years experience and 5 in the position Jack took over). Jack was hired at a salary 10% more than Janice and 15% more than Jill. Does this pass the gender bias smell test?