Pay check: the unintended consequences of salary transparency

工资条:薪酬透明化的意外后果

Editor's Picks from The Economist

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2025-01-30

5 分钟
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A handpicked article read aloud from the latest issue of The Economist. Few conversations between colleagues are more discomfiting than a discussion about salaries. But greater pay transparency doesn't always lead to good outcomes. Listen to what matters most, from global politics and business to science and technology—subscribe to Economist Podcasts+. For more information about how to access Economist Podcasts+, please visit our FAQs page or watch our video explaining how to link your account.
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  • The Economist Hello, Mike Byrd here, co-host of Money Talks,

  • our weekly podcast on markets, the economy and business.

  • Welcome to Editor's Picks.

  • We've chosen an article from the latest edition of The Economist,

  • which we very much hope you'll enjoy.

  • How much do your colleagues get paid?

  • In a few countries, such as Norway,

  • you can take a good guess by looking at public records on individuals' overall tax payments and income.

  • But in most places, finding out people's salaries means asking them what they earn.

  • And that is about as socially acceptable as saying, what an ugly baby.

  • In a recent study,

  • Zoe Cullen of Harvard Business School and Ricardo Perez Trullia of the University of California Los Angeles offered monetary rewards to employees of a South East Asian bank

  • if they were able to accurately estimate the wages of some of their peers.

  • The researchers found that a majority of employees were very uncomfortable about asking colleagues about their pay and were also unwilling to reveal their own salaries to their colleagues,

  • particularly if they thought they might be earning more than them.

  • Norms of privacy and secrecy around income help explain why legislators who fret about unfair pay differentials increasingly require greater transparency.

  • Few jurisdictions are as radical as the Scandinavians,

  • but more and more of them are mandating that firms disclose gender and other wage gaps,

  • publish pay ranges on job adverts or refrain from asking about applicants' prior earnings.

  • New transparency laws take effect in Illinois, Minnesota and Vermont this year.