Opinion: there are many reasons why people are reluctant to tell others how much they earn.
In the age of Facebook, Twitter and other social media, disclosure is the norm. However, there is one big exception: people are often quite reluctant to talk about their pay. Business publications and weblogs, ranging from Forbes to Financial Samurai routinely run columns advising readers to never tell anyone else how much they make.
One explanation for the reluctance to discuss pay is the idea that people are judged by how much they make – that it, people’s pay is sometimes used as an index of people’s worth. Another explanation is that discussions of pay can lead to conflict. When people compare their pay to the pay others receive, this often leads to perceptions of unfairness.
For example, in a popular TED Talk, David Burkus, a Professor of Management, notes that a substantial majority of people who are paid at the market rated for their jobs nevertheless believe that they are underpaid and that others are paid higher. There are many reasons for this widespread perception of pay unfairness, but the simplest is that people routinely overestimate their performance and their contribution to the organisation.
Research on peoples’ perceptions of their performance, effectiveness and worth has documented a number of factors that lead people to overestimate their own performance and contribution. First, there is the so-called Dunning-Kruger effect where incompetent people simply do not recognise that they are incompetent and often feel quite confident even when they have no real idea what they are doing. Second, there is a strong need for most people to maintain a positive self-image, and one way to do this is to believe that you are a superior performer. This is one reason why about three quarters of all people think they are "better than average" drivers.
Finally, people are biased in how they explain their successes and failures. Many people engage in what is called a "fundamental attribution error", explaining their own successes in terms of things like ability and hard work, while explaining their failures in terms of things like bad luck. At the same time, they tend to explain others’ successes in terms of things like cheating or underserved help from others and others’ failures in terms of lack or talent or effort. This leads people to take lots of credit for their own successes and dismiss their failures, while at the same time dismissing others’ successes and blaming them for their failures. All of these biases lead people to over-estimate their performance and worth, and therefore to believe that they are not being fairly rewarded.
From RTÉ Radio One's The Business, Martin Fellenz of TCD and John Ryan of Great Place to Work Ireland discuss the culture of secrecy around salaries
Many people benefit from the reluctance to discuss pay. For example, bosses are often flatly tell their employees not to discuss or disclose their salaries, claiming that these discussions will cause conflicts. Even though these "gag rules" are often illegal, they are surprisingly common. Bosses may have legitimate concerns about the way salary discussions can lead to conflict, but they also have a vested interest in keeping pay levels secret. Pay secrecy creates a condition of "information asymmetry" in which employees do not know how much they are paid relative to their peers, but employers know about everyone’s pay. This makes it difficult for employees to bargain effectively for salaries.
Pay secrecy appears to be an important factor in gender discrimination. It is well known that women, on average, receive lower salaries than men. There are many reasons for this gender gap in salaries, ranging from the segregation of men and women into different jobs and careers (for example, most firefighters are men and most secretaries are women), the effects of leaving the job market to have and raise children and sex discrimination. If women do not know what they are being paid in comparison to men in the same job and in similar jobs, it is very difficult to challenge discriminatory pay.
In his TED Talk, Professor Burkus claims that we would all be better off if information about salaries was more widely shared and there is a growing movement to do exactly this. The hastag #talkpay asks people to tweet their job titles, salary and experience levels. Many of the tweets that show up on this site are inspired by concerns over pay equity.
Still, people often feel uncomfortable if others know their salary. Once they know other peoples’ salary, especially the salaries of people with similar jobs and levels of experience, people often feel like they are being cheated. We live in a world where people often have little reliable information about how well they perform their jobs and even less about how well others perform their jobs. In this situation, breaking the taboo and talking about pay may be a risky strategy.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ.