No, I Will Not Tell You How Much Money I Make

In California, companies may not prevent their employees from disclosing how much money they make. One's wages are protected as public information (if one chooses to make it public that is). In fact, some websites like Glassdoor are trying to systematically catalog wages of different employees and make them available to job seekers. 

The Atlantic's Daniel Indiviglio remarks on these facts with approval. It is hard to say if he believes other states should follow California's lead or if individual workers should disclose their pay when their contract does not prohibit them from doing so. Either way, there are good reasons that we keep our pay private and I think companies have a legitimate interest in building such restrictions into their employee contracts.

Indiviglio's arguments are thought-provoking and interesting, but they face an uphill battle from the start, as he briefly acknowledges.

His main of example is rising Wall Street executive compensation. Indiviglio argues that wages are always increasing as each CEO demands to be paid more than average, leading to a game of leapfrogging salaries. I am not sure why this situation would result in escalating pay though, because typically efficient markets pay for performance, not just based on what people demand. There may be psychological dynamics relating to prestige and the egos of CEO's, but on the face, it seems like escalating pay would just come to a halt when a board of directors thought some CEO wasn't worth his asking price. 

Stepping back though, Indiviglio's main point is somewhat plausible. If you know what other people are making you can know if you can make more; thus, people will move more quickly into their optimal job, thus increasing efficiency. Also, you can bargain more effectively with a company when you know what their employees are making. You can confidently ask for 50K because you know most of their salespeople make 52K.

However, there are costs to the widespread availability of such information.

One is jealousy. People have a hard time working with someone who they think is less competent but making more money. This increases office tensions and could have a drag on productivity: There may be more fights, time delayed due to sniping at each other, and the employee that is paid less may withhold information from his better paid co-worker in order to sabotage her or to advance her own position.

Sometimes ignorance is better. Pretend that my skills make me best suited to being an HR manager. I take pride in my work, but in the grand scheme of things, I'm still worse than the average HR manager. If salaries are revealed by my peers, I go from being a generally satisfied white collar worker to a dissatisfied cog who has just found out that I'm paid worse than average for the one thing I thought I was good at.

Contract should rule. If you accept a limitation on what you can say about your salary, this should be an enforceable bargain.

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