Following the abrupt ouster of Jill Abramson as the first female executive editor of the New York Times, the New Yorker magazine on Wednesday published an article suggesting that one of the reasons for the departure was a contentious salary conflict. Abramson, the magazine writes, became angry upon discovering that she was paid “considerably less” than her predecessor, Bill Keller. The Times vehemently denied the account by veteran media reporter Ken Auletta, and its publisher, Arthur Sulzberger Jr., sent an internal memo to staffers on Thursday calling it “simply not true.”
But questions about a possible disparity can still persist, because the truth is locked inside the small circle of those directly involved. To the growing number of proponents for pay transparency, conflicts and rumors like the one illustrated above raise an important question: Wouldn’t we just be better off if everyone knew everyone else’s salary?
“It is absolutely worth asking,” said Linda Barrington, executive director of the ILR School Institute for Compensation Studies at Cornell University.
In a culture where talking about money is more taboo as talking about sex, the idea of having salaries out there for anyone to look up is bound to raise a few nervous eyebrows. The “don't ask, don't tell” mindset that permeates American workplaces is so common it’s accepted as an immutable truth: Of course you don’t talk about your salary with your co-workers. It’s a mentality instituted from the top down, with company executives either strongly discouraging workplace discussions about compensation or outright prohibiting their employees from talking about it.
But Barrington said it’s important to know one thing: Companies that forbid their employees to speak openly about what they get paid are violating the law, in particular the 1935 National Labor Relations Act. While the law doesn’t explicitly address pay secrecy policies, it does give employees the right to bargain, and pay secrecy agreements are generally seen as an impediment to a healthy bargaining process. “Those agreements typically do not hold up in court,” Barrington said. “Employees have a right to engage in concerted activities for the purposes of bargaining. In decision after decision, that’s been classified as including compensation.”
Companies often argue against pay transparency on the assertion that it would create tension and resentment in the workplace, and may even impede them from attracting top talent. As the argument goes, sought-after employees often command larger salaries than existing employees, and raising wages for everyone would be too much of a strain, particularly for small businesses. “I still think an open salary model might work in a larger company with significant resources, but it is not an effective use of time in early-stage companies,” Slava Akhmechet, chief executive of the tech company RethinkDB, told the Wall Street Journal last year, shortly after his company had decided to abandon an open-salary policy.
Dane Atkinson, chief executive of the analytics firm SumAll, disagrees. His company has had an open salary policy since it was founded. As a result, he said, his employees are happier and everyone is in a stronger negotiating position. “If you’re a capitalist at heart, and you believe that open markets are healthier markets, there’s no reason why you wouldn’t want to have transparency in the salaries,” Atkinson said in a phone interview. “It makes it easier for other employees to strive for greater excellence. If you look at athletic teams, there are lots of categories where everyone knows what the different athletes are making, and that creates a very competitive and healthy marketplace for future team members.”
Barrington points out that pay transparency is more than just an experimental concept for tech startups built around innovation and blowing up previously existing business models. In fact, the nonprofit and public sectors have been practicing pay transparency for years, and it seems to work quite well. “When we think about the U.S. workforce, there are a lot of cases where the salaries are public,” Barrington said. “And those companies don’t fall apart.”
Atkinson said keeping salaries private is more about protecting the status quo than creating a better working environment. He said closed salaries foster “monstrous discrepancies in how people are treated,” and he speaks from experience. Although he’s currently one of the most vocal proponents for pay transparency, he’s also a lifelong entrepreneur whose previous companies operated under a traditional closed-salary model, with all the secrecy, shadiness and disparity that goes along with it. “I was as abusive as anyone else,” he said. “Even though I intended not to be evil, it’s really tricky not to be.”