Podcast week VIII

Is pay transparency a good thing? Some believe it can benefit both the employer and employees. There are two sides to look at regarding the benefits of paid transparency. When considering if pay transparency is a good idea, we need to look at the pros and cons from both the business owner(management) and from the employees.

When making salaries public there have already been signs of the bad. Salaries since this law was passed have already decreased 2.7%. Employers will begin overcompensating to keep the pay fair and at the moment, they are lowering salaries instead of raising everyone’s. This has also caused companies to bargain much more aggressively when hiring. The reason for this is that if a new hire gets a slightly higher salary at the start, then older employees will want a raise. Norway has already made pay transparency available to the public. For a long time it was only being used to snoop around and see friends’ salaries. It was originally created to prevent tax evasion. A study showed that this new law made rich people happier and poorer people more miserable. There have now been a lot of mixed results and only time will show if this is truly beneficial.

There is also a chance that pay could eventually be increased because of pay transparency when competitors are trying to poach talent from each other. Pay transparency was created to lower inequality with women, and minorities. Studies have shown that wage gaps have already begun closing with this new transparency. Many companies such as google have had wage transparency and showed positive results. Another company called buffer has also been doing this for a while. Buffers experience was also beneficial to the employers and employees. They mentioned that this increased trust between both parties. Now they explain why someone would get more pay such as more responsibility, location of job, or education. They only have exceptions for people who have a very high income and could be dangerous to them if others knew. The problems they had with pay transparency were dealing with different cultures that aren’t okay with this. Another downside is that employees now face is that companies have the right to say, “we can’t pay you this amount, because then we have to pay everyone this amount”. This issue with this it lowers the employees leverage to negotiate better salaries. Overall, they believe this holds a company to a higher standard of honesty and integrity.

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