Why salaries shouldn't be secret

[AthenaAwakened]

Well, this is part of the mystification of money, isn't it?

I teach two weeks each summer at a UU camp. In the evenings, the campers like to gather in the living room of main building on campus and have a discussion group. Every year, the most popular topic, even more popular than sex, is money. The kids are fascinated by it but their parents never talk to them about. Since the beginning of on line banking, I have had kids who don't know where their family bank is; because of debit cards, they can't balance a check book or count back change to a customer without a calculator. They can't tell you a ballpark figure of what their parents make, what a week's worth of groceries cost for their family, what the average electric bill is, none of that.

Parents would rather read aloud to a preschooler from Masters and Johnson than tell a middle schooler about budgeting and paying bills. And this unwritten rule about NOT talking about money follows these kids well into adulthood. So you wind up with an employee pool of people scared to talk about money and wondering why they don't make more.

 

[Tom Sawyer]

About the only situation where it would be a problem is where you were paid significantly more than your team mates.

And that's not even a problem if there's a good reason why you're paid significantly more. If your boss can say that Bob did X, Y and Z and his salary reflects that, then while Bob's coworkers may be annoyed about getting less, they can see that doing X, Y and Z will translate into a raise. If it turns out that Reason X is "Bob gave his boss a really good blowjob during a business trip, videotaped it and threatened to send a copy to the boss's wife unless he got money" then that's something that Frank and Susan also should know in case they're also really good at giving blowjobs.

 

[Bronzeage]

Aren't most salaries public knowledge anyways? I know they have data along the lines of computer programmers get an average of X dollars in this city and nurses get an average of Y dollars in that city. They can't have that unless the data is already available for them to compare.

The salary range and the average in any company is fairly easy to determine, but that's not really the issue. What's at stake here is whether you are making more money than me, while we do basically the same job. The catch word here is "basically."

When this sort of thing was my problem, either from the getting paid side, or the paying side, there was always a lot of jealousy and hurt feelings over the real pay rate and how it compared to the rest of the crew. In an auto repair shop, the customer pays for the work and the money is divided many different ways. The mechanic's share of each customer dollar can vary widely from job to job. In the old days, it was set percentage of the labor dollar. When I was young, I had one of the last 50% commission jobs. For every dollar of labor, I got half. This was quite lucrative. It made sense. Simple maintenance jobs were priced at a low rate, while complicated repairs were priced higher. Mechanics with greater skill and ability made more money, even though time on the job was the same.

It was easy from the manager's point of view, but this system fell out of favor because every increase in the labor rate was an automatic raise for the mechanic. The alternative was to instead of the dollar value of the job, use the time value to set the mechanics pay. The time allotted for every repair was listed in a table(called the "flat rate") and each mechanic had their own hourly rate. A one hour job was worth one hour of his hourly rate, no matter how much time it actually took. In my last years as a mechanic, I averaged 55 hours pay, for a 45 hour work week, over the period of a year.

This gets complicated for the manager, who is responsible for not only paying the mechanics, but also the rent and the light bill. Each mechanic needs a certain amount of space and the actual profit made from his work space can be calculated. Oil changes maybe the lowest profit margin work done, but the oil change guy will be the lowest paid man on the crew, so it evens out. Complex transmission repair is priced much higher, but the mechanic is also paid higher. Somewhere between the two is the profit margin for the business.

The real problem comes when a manager has to decide the pay rate for each man. A highly trained and skilled transmission mechanic might actually produce less profit for the shop than the oil change guy. Mechanics tend to be the kind of person who thinks highly of themselves. Imagine that. So, there is a lot of pride and ego at stake. We also have to consider the rarity of some skill sets. A good transmission man is hard to find, while oil change guys are common. This means the shop may have to take a smaller share of the customer dollar, in order to keep the transmission man from taking a better paying job with a competitor.

This gets really complicated when certain maintenance jobs are offered at a discount. Oil changes are the most common. It's entirely possible for a manager to have a crew of older experienced higher paid mechanics, which means the average pay is fairly high. If the old guys perform the oil changes and the brake job specials, the shop may actually lose money on the work. This creates the paradox of going into the red because business picked up.

The only way to operate a profitable shop is to have a crew which has high paid high skill mechanics, and low skill low paid mechanics. No one wants to think of themselves as low skilled and everyone wants easier lucrative work. Most managers think it is easier to deal with individuals when no one knows what the other is paid. They make a big deal about privacy, which is bullshit. The real reason they want pay levels to be secret is because they feel a need to manipulate workers, instead of being straightforward with them. Everybody wants a raise. When pay levels are secret, the manager can give one man a reason why his pay is capped at the current level, and a different reason to another. A high producing man can be told he can't have a raise because he lacks training, while another man who has the training, is told his production is too low.

If it were up to me, a chart would be posted each week, showing every man's production and pay.

 

[ksen]

Hmmm, so in order to screw the mechanic the system was made much more complex and also led to a higher likelihood of the shop making less money or even losing money.

Sounds about right in the era of modern business shooting themselves in the foot in order to pay the employees as little as possible.

 

[Keith&Co.]

because of debit cards, they can't balance a check book or count back change to a customer without a calculator.

That's not because of debit cards.
My dad's one and only interview question for job applicants was to pick three things off the drugstore shelves, put those and a twenty dollar bill on the counter and say: Figure out the cost, the tax and make change if any.

This eliminated 8 out of every 10 high school kids that wanted a job. 4 out of every 10 college graduates. This was 1982. They just stopped doing math once calculators were under $100 for a four-function unit that plugged into the wall.

 

[dismal]

That's kind of the point.

With a transparent salary structure it'll be harder for companies to lowball employees while rewarding their favorites.

That's why I hate it when companies ask you what you want to make because I'm sure most people underask for fear of pricing themselves out of the job and companies are quite happy to have that situation in place.

Why wouldn't it make it easier for companies to see how little they have to pay people to get them?

If for example, there's a public database that shows Company A pays a Receptionist $30,000 and Company B pays a receptionist $40,000 wouldn't the greedy and ruthless new Company C access the data and elect to pay their receptionist $30,000? Why wouldn't the greedy and ruthless Company B access the database and cut their receptionist back to $30,000?

You didn't forget Companies are greedy and ruthless and hellbent on driving wages down did you?

 

[ksen]

Yeah, not going down your public database rabbit hole.

 

[Keith&Co.]

You didn't forget Companies are greedy and ruthless and hellbent on driving wages down did you?

Well, all it takes is one company being ruthless and greedy, then all the good guy companies have to drive down their costs in order to compete... So they're not all evil, they just look that way as they either adapt or go bankrupt.

 

[Nice Squirrel]

Though shalt not speak ill of shareholder value

 

[Jason Harvestdancer]

Who will have access to this database? Will it have names? It must have names if Bob's co-workers can figure out that Bob is making more than they are.

Hello, I'm your friendly neighborhood burglar. As I read this database, I see the neighbor two doors down only makes $30k per year, while the neighbor three doors down makes $75k per year. I think I know who my next target is. Thank you government database.

 

[dismal]

Yeah, not going down your public database rabbit hole.

So then, tell us the non-rathole version where this data is public and easily accessible to employees but employers (who are also part of the public...) don't use it to push wages down.

 

[Keith&Co.]

Whenever someone gets an award around here, there's an instant deconstruction of their effort on whatever project is mentioned in the award. Doesn't last too long ,usually, though feathers have been ruffled by people wondering aloud how holding a coffee cup and asking 'how's it going' is contributing to the project enough to get an award, while everyone else's efforts didn't get the same attention or mention at higher levels.
It has sometimes led to people storming off for an afternoon or closeted discussions with the manager, the team leader, the project boss.

I would worry that a transparent payroll would have the same sort of drama, but on a more regular basis, involving more people. Sheer jealousy and resentment taking up workers' time, managers' time, leads' time and so on.

This would also draw attention to pay actions, as people check the new payrolls and calculate the raises, and start to ask what Johan did to earn an Outstanding while the team doing all his work got Acceptable. And more time in cloistered bitching and justifications and explanations.

And six years ago, i got half a percent raise in the year that the average for my pay grade was 1.3%. The reason was because my manager did not understand what i did for a living. That's the first thing out of his mouth when i sat down to get my eval. Nothing i did wrong. I'd have hated for people to see that my progression in the company tanked for that year and draw conclusions about my performance which were not accurate.



All in all, i just don't see that my pay is anyone else's business but mine. The company can release statistical data to the trade magazines about industry averages without indicating that Keith gets $44,342 a year while the brain dead mouth breathing teeth sucking paper pushing work stealing identity thieving intern groping mealy mouthed incompetant ass of a lead (just as an example) pulls $80+ just for saving keith files to his computer before handing them in and taking credit.

 

[arkirk]

If capitalism and employment are such good ideas, then why all the whispering? What's wrong? Is somebody getting screwed? I think so. Wages and salaries should all be known. Maybe we begin to see just why these secrets are being kept. If working for the company is good, and the system is sound, what is to be feared with everybody knowing the truth? Whenever somebody is keeping something secret about the place you work, there is every reason to suspect the worst and it usually is true.

 

[Jason Harvestdancer]

I rather think people have a right to privacy, and the employer-employee contract isn't really the business of anyone else.

Plus my comment at the bottom of the previous page.

 

[laughing dog]

I rather think people have a right to privacy, and the employer-employee contract isn't really the business of anyone else.

Sure, why let markets have sufficient information to function properly? Whether or not it is someone's else business should be up to the employee, not the employer who has a policy to fire employees who discuss their salaries.

 

[Nice Squirrel]

Who will have access to this database? Will it have names? It must have names if Bob's co-workers can figure out that Bob is making more than they are.

Hello, I'm your friendly neighborhood burglar. As I read this database, I see the neighbor two doors down only makes $30k per year, while the neighbor three doors down makes $75k per year. I think I know who my next target is. Thank you government database.

As pointed out above. Both Laughing Dog's and my are listed with our names. Also, if you were a good at burgling you would know that a person that makes more money does not necessarily have the best stuff.

 

[Jason Harvestdancer]

I rather think people have a right to privacy, and the employer-employee contract isn't really the business of anyone else.

Sure, why let markets have sufficient information to function properly? Whether or not it is someone's else business should be up to the employee, not the employer who has a policy to fire employees who discuss their salaries.

Why is it that everyone except free marketers believe that a free market needs perfect information to operate?

Plus my comment at the bottom of the previous page.

 

[Bronzeage]

Hmmm, so in order to screw the mechanic the system was made much more complex and also led to a higher likelihood of the shop making less money or even losing money.

Sounds about right in the era of modern business shooting themselves in the foot in order to pay the employees as little as possible.

Bronzeage's Rule #5 states, "The more complicated the pay plan, the less you are getting paid, but every business pays their employees as little as possible. What is possible, is a very subjective subject.

It's not as sinister as it appears. In the days when I got half the customer's money, I provided almost every tool I needed for the job. The shop supplied really big things, such as my engine analyzer oscilloscope and front end alignment machine. These days, the shop's share of the equipment bill is much greater than it was then. There's no future in working for a company that pays well, but closes because it can't pay the rent.

Changes in the pay plan always favor the company and are always geared toward making more money. It requires smarter managers, which are always in short supply. One sign of a dumb manager is he/she thinks keeping pay levels secret gives them a real advantage.

 

[ksen]

Who will have access to this database? Will it have names? It must have names if Bob's co-workers can figure out that Bob is making more than they are.

Hello, I'm your friendly neighborhood burglar. As I read this database, I see the neighbor two doors down only makes $30k per year, while the neighbor three doors down makes $75k per year. I think I know who my next target is. Thank you government database.

What database?

- - - Updated - - -

Whenever someone gets an award around here, there's an instant deconstruction of their effort on whatever project is mentioned in the award. Doesn't last too long ,usually, though feathers have been ruffled by people wondering aloud how holding a coffee cup and asking 'how's it going' is contributing to the project enough to get an award, while everyone else's efforts didn't get the same attention or mention at higher levels.
It has sometimes led to people storming off for an afternoon or closeted discussions with the manager, the team leader, the project boss.

I would worry that a transparent payroll would have the same sort of drama, but on a more regular basis, involving more people. Sheer jealousy and resentment taking up workers' time, managers' time, leads' time and so on.

This would also draw attention to pay actions, as people check the new payrolls and calculate the raises, and start to ask what Johan did to earn an Outstanding while the team doing all his work got Acceptable. And more time in cloistered bitching and justifications and explanations.

And six years ago, i got half a percent raise in the year that the average for my pay grade was 1.3%. The reason was because my manager did not understand what i did for a living. That's the first thing out of his mouth when i sat down to get my eval. Nothing i did wrong. I'd have hated for people to see that my progression in the company tanked for that year and draw conclusions about my performance which were not accurate.



All in all, i just don't see that my pay is anyone else's business but mine. The company can release statistical data to the trade magazines about industry averages without indicating that Keith gets $44,342 a year while the brain dead mouth breathing teeth sucking paper pushing work stealing identity thieving intern groping mealy mouthed incompetant ass of a lead (just as an example) pulls $80+ just for saving keith files to his computer before handing them in and taking credit.

I guess other than all the real world examples where this doesn't happen you'd be right?

 

[laughing dog]

I rather think people have a right to privacy, and the employer-employee contract isn't really the business of anyone else.

Sure, why let markets have sufficient information to function properly? Whether or not it is someone's else business should be up to the employee, not the employer who has a policy to fire employees who discuss their salaries.

Why is it that everyone except free marketers believe that a free market needs perfect information to operate?

No one mentioned perfect information, so your observation appears pointless. Markets operate more efficiently when there is more relevant information available.

It is fascinating to see self-proclaimed libertarians argue against markets operating efficiently and against freedom of speech.

Plus my comment at the bottom of the previous page.

While I am always up for a good laugh, those comments were neither relevant nor amusing.