Want to Close the Pay Gap? Pay Transparency Will Help

Here’s what we know about salary transparency: Workers are more motivated when salaries are transparent. They work harder, they’re more productive, and they’re better at collaborating with colleagues. Across the board, pay transparency seems to be a good thing.

Transparency isn’t just about business bottom line, however. Researchers say transparency is important because keeping salaries secret reinforces discrimination.

“From a worker’s perspective, without accurate information about peer compensation, they may not know when they’re being underpaid,” said Emiliano Huet-Vaughn, an economist at U.C.L.A. who ran a study in 2013 that found workers are more productive when salary is transparent. Without knowing what other workers’ salaries look like, “it naturally becomes harder to make the case that one is suffering a form of pay discrimination,” Dr. Huet-Vaughn said.

Which brings us to the wage gap. Rather than a deliberate, methodical attempt to sabotage women’s earnings, often the wage gap takes on more subtle, but no less detrimental forms. For example, women are viewed as less likable when they negotiate. They’re also less likely than men to get what they want when they ask for a raise, according to Harvard Business Review.

By keeping compensation secret, we might obscure structural inequalities and enable inequalities to persist, In the big picture, it’s easy to see how these biases might contribute to a wage gap, but it’s harder to prove wage discrimination on an individual level. Employers can hide “structural inequalities” (even from themselves) with a myriad explanations. When wages are transparent, it’s harder to hide.

It’s not just women. Pay secrecy reinforces racial biases as well, and the pay gap is wider for minority men and women. A recent study  found that when black job applicants negotiated their starting salaries, evaluators viewed them as more pushy than white job applicants who also negotiated. Evaluators also mistakenly thought black job applicants negotiated more than white applicants, even when they negotiated the same amount. Worse still, the black job applicants received lower starting salaries as a result of this.

Because evaluators expected black job seekers to ask for less, they perceived the black applicants as pushy when they negotiated and penalized them accordingly. In the real world, employers probably aren’t even aware of this dynamic; that’s how unconscious biases work. When numbers are out in the open, however, it’s easier to see potential blind spots.

“In my opinion, transparency in pay can be one way to help us calibrate our own views of fairness and appropriate compensation,” Dr. Hernandez said.

“Information alone is not enough. Remedying such discrimination will require institutions — governments, unions, courts, political and advocacy organisations — with a willingness to make use of that information,” he said. Transparency may not be the cure-all to inequity, but we need a starting point.