Hello and welcome to Financial Face-off, a MarketWatch column where we help you weigh financial decisions. Our columnist will give her verdict. Tell us whether you think she’s right in the comments. And please share your suggestions for future Financial Face-off columns.
The job market is hot and so are salaries. People are quitting jobs in record numbers, often because they’ve landed a new gig with better pay. Some 40% of people who’ve switched jobs said they got a raise of 10% or more at their new company, an April survey by the tax-advisory firm Grant Thornton found. Meanwhile, wages are rising overall as employers seek to lure talent, and new state and local laws are requiring companies to be more transparent about pay.
All this salary talk may have you thinking about your own paycheck, and whether you should ask for a raise or try to find a new job with higher pay. Maybe you’re wondering how your pay stacks up against your coworkers. One way to investigate is to share your salary information with your colleagues.
So should you tell your coworkers how much money you make?
Why it matters
Information is power, and when it comes to salaries, having more information may help you ensure that you’re getting paid fairly.
If you’re a woman or a person of color, statistics suggest you’re unlikely to earn as much money in your lifetime as a white man. Longstanding gender and racial pay gaps are fueled by a host of factors including discrimination, occupational segregation (where certain groups are overrepresented in fields with lower pay and scant benefits), and the fact that women often leave the workforce or work fewer hours than men so they can take on caregiving duties.
There are signs that younger workers are starting to ignore the workplace taboo about discussing pay. Almost 42% of Generation Z workers (ages 18 to 25) and 40% of millennials (ages 26 to 41) “have shared their salary information with a coworker or other professional contact,” compared with 31% of Gen Xers (ages 42 to 57) and 19% of baby boomers (ages 58 to 76), a national Bankrate survey in March found.
However, pay transparency is still the exception, not the rule.
“As of now, pay transparency mandates in the United States vary from state to stateand a large majority in the public sector are lacking or often misunderstood,” said Scott Bonneau, the vice president of Global Talent Attraction at the job-search site Indeed.
“In fact, secrecy around wages is so embedded in the national psyche that a majority of employees do not discuss their wages with coworkers,” Bonneau added. “Open discussion of salary is protected by law, but 63% of people have never asked a coworker about their pay, according to a recent survey Indeed conducted.”
Yes, share your salary information—but only if you can answer yes to these statements:
1) I have a productive reason for wanting to share my salary information with my coworker. (If you’re doing it to brag or complain, don’t.)
2) If I find out a coworker with similar experience and job duties makes more money than I do, I have a plan for what I’ll do with this information — and I’m in a position to effect positive change for myself. (Having information and being powerless to use it is not helpful. If you’re hoping to get a raise out of this, make sure you’ve brushed up on your negotiation skills and done research about compensation for your position at other companies.)
3) Finding out that a coworker with a comparable resume makes more or less money than me will not affect my ability to work with this person. (If you know your working relationship can’t withstand such a disclosure, it’s best not to risk it.)
Keep in mind that pay transparency between coworkers is a different animal than pay transparency during the hiring process. During the hiring process, knowing exactly how much a position pays can keep applicants from wasting their own time and the employers’ time, because they won’t apply for jobs that don’t suit their pay needs, says Charles Lehman, a labor economist and board member with the National Career Development Association.
“The more information that can be shared, the better the labor market works,” Lehman said. However, once you’re inside an organization, openly discussing pay can, at worst, lead to jealousy, hurt feelings and loss of team morale.
On the flip side, confiding in a coworker can create trust and even lessen competition, which can free employees to focus on achieving the businesses’ external-facing goals instead of wasting energy on wondering what their officemates earn.
“Sharing salary can build that equitable culture, and it can be hard to have that when everybody is hiding what they make,” said Marie Zimenoff, the CEO of Career Thought Leaders, an organization that educates career coaches and other career industry professionals.
You can love your job, and you can love your boss, but your job will never love you back. A company may say it treats its employees like family, but companies exist to make money, full stop. There may be times when you need to stick up for yourself and ensure that your company is compensating you fairly. Sharing salary information can have implications not just for you, but across the organization.
“What organizations say they can pay and what they pay can differ,” said Shelley Piedmont, a career coach with Career GPS, LLC. “By sharing your salary (and other negotiated compensation), you help yourself and your peers, especially women and people of color, understand the country dynamics in the organization and better advocate for themselves.”
Is my verdict best for you?
This is a personal decision and it’s not one to take lightly. You may be surprised to find you feel more emotional than expected if you start digging around about coworkers’ salaries.
Also, “[k]eep in mind that some companies prohibit discussing pay during working hours or while using company devices, so make sure to check your company policy to protect yourself when discussing salaries with coworkers,” Bonneau said.
Carefully consider your relationship with the colleague with whom you’re considering sharing salary information. Research suggests there are different results — sometimes damaging ones — depending on whether employees learn salary information “vertically” (when employees learn their managers’ salaries) or “horizontally” (when we learn our peers’ salaries).
Don’t go down this road if you’re being pressured by a coworker, or if you’re missing the larger context about how compensation works at your organization. It’s not only about salary: Some companies reward workers with cash bonuses, extra vacation, flexible schedules and other less-tangible perks.
Case in point: That Grant Thornton survey about people switching jobs I mentioned earlier found that in addition to better pay, workers also took new jobs because they offered better work-life balance, opportunities for advancement, benefits and greater autonomy. Over one-third (34%) “said their new job offered a better ability to balance work and personal commitments,” according to Grant Thornton.
“[S]haring salary information tends to work out best when it is treated as an information-gathering exercise; the most benefit to everyone comes from people understanding how their work is valued in the market,” Bonneau said. “However, it is easy for it to become a comparative or competitive exercise, which can undermine the trust needed for people to feel safe choosing to share this information.”
One final note: It’s all well and good to challenge workplace norms now at a time when employees are in high demand and, in theory, have the upper hand with management. But there are also times when you can ill afford to risk losing your job and paycheck, and maintaining that security may be more important than spilling the beans about your salary.
Tell us in the comments which option should win in this Financial Face-off. If you have ideas for future Financial Face-off columns, send me an email.