Workers will go to great lengths to keep their salaries private. And they may be hurting themselves in the process.
In a survey of more than 750 workers conducted by researchers at Harvard Business School and UCLA, 80% of respondents said that they would be willing to pay money to stop an email containing their salary information from being distributed to co-workers. Indeed, workers’ hesitancy to talk about how much money they earn was so strong that around half of the people surveyed said they still wouldn’t tell five peers what they earn in exchange for $125.
“Individuals are afraid to ask coworkers about their salaries, because they understand that most coworkers prefer to keep their salary information private,” the researchers wrote in a new working paper distributed Monday by the National Bureau of Economic Research. “Employees may be afraid to ask coworkers about their salaries because that may force them to reveal their own salaries, which they dislike.”
Those same standards don’t apply when it comes to other signals of status in the workplace. While 69% of respondents find it to be inappropriate to ask a co-worker about pay, only 6% thought it was unacceptable to ask about seniority.
Workers are bad at guessing how their salaries compare
However, this reluctance could work against employees — they may undervalue their own work. When asked to guess the average salary among their peers and compare those findings to the actual average, only slightly more than one in four workers guessed within 5% of the actual average salary.
One reason workers are shy about revealing their salaries: People tend to think they have a good idea of what their peers earn. More than half (56%) of respondents believe that their guess was within 5% of the real average. In actuality though, people’s guesses were 16% off the real figure on average.
There was, however, a twist to their findings. Women — who are paid approximately 83% of what men in similar jobs make, according to the Bureau of Labor Statistics — were less confident in being able to guess their colleagues’ average salary, but they were correct slightly more often than men when they did.
Salary transparency can boost workers’ wages
Other studies have suggested that salary transparency does help level the salary playing field for women and minorities. A survey from PayScale.com found that women who declined to disclose their salary when asked were offered 1.8% less than those who chose to provide that information. But men were offered 1.2% more on average if they stayed mum on their current salary.
“Women face a ‘social cost’ that men do not when they initiate salary negotiations, regardless of the gender of the person with which they’re negotiating,” PayScale vice president of content strategy Lydia Frank wrote for the Harvard Business Review. “By not disclosing their salary, the women in our study may have signaled to a potential employer that they were intent on negotiating — and were punished for it.”
The authors in the latest working paper, however, theorized on ways in which greater salary transparency could lead to a backlash for some workers. “If an employee reveals to a coworker that she gets paid more, her peers may stop treating her well, or if her manager finds out, the manager may deny her a raise,” they wrote. But other studies have indicated that people who make more money may be rewarded with higher status when that fact is known.
Consequently, the researchers argued that some level of anonymity should be considered when constructing new policies on salary transparency, as some companies are doing in the wake of the #TimesUp movement. In other words, people may want to help an individual negotiate a new salary by revealing their own wage, but that could cause bigger problems if those details become more widely known.