How Do We End The Wage Gap? Demand Transparent Salaries

Today at Forbes Woman, Mary Ellen Egan questions the cause for the persistent wage gap between men and women. But where are the solutions?

Egan, a staff writer at Forbes, outlines the issues she has seen through the course of her own career: institutional and cultural biases, lack of opportunity to prove competency, and women being uncomfortable with asking for raises.

The lower pay issue can also be attributed to bias. If you value a man’s work over a woman’s, then you’re going to pay him more.

But the lack of pay parity isn’t solely an offshoot of the old boy’s network. A lot of women, myself included, are uncomfortable asking for a raise or demanding a better starting salary.

When I was in my 20s and 30s, I took whatever what the company offered me, thinking that once I proved myself that my hard work would be rewarded. It wasn’t. So I learned to find my own voice and started asking for what I felt I was due. But because I spent too many years not asking for what I deserved, I’ve never been able to catch up to my male peers.

Women have identified the issues that accompany rising up the corporate ladder and fighting for raises and promotions since it became culturally acceptable for them to hold white-collar positions. Some have found the solution is to redefine success – others have chosen to leave the corporate world in favor of starting their own businesses. But for those women with aspirations to have a successful career in corporate America, how can we end the wage and promotions gap?

The solutions are all around us. And one of them is to do the unthinkable: make salaries transparent.

Last year, business magazine Inc. published a piece by Joel Spolsky, CEO of Fog Creek Software, a company that doesn’t allow wage haggling. Instead, using an algorithm and ranking system, each employee is assigned a level (i.e. 8, 9, 10) based on their skill set, kind of like the United States government’s GS payscale. Each level is assigned a salary, and every person at the same level receives the same amount. While the owners of the company occasionally use bonuses to reward work they feel goes above and beyond, they take pride in their system of workplace equality:

Because salary information is viewed as particularly sensitive, employers often go to great lengths to keep it under wraps. Some companies even make it a fireable offense for employees to compare salaries, or they write something into the standard employment contract prohibiting workers from disclosing their pay. (In the United States, this kind of rule is unenforceable, by the way, but some bosses hope their workers won’t know that.) The trouble with keeping salaries a secret is that it’s usually used as a way to avoid paying people fairly. And that’s not good for employees — or the company.

However, paying people equally isn’t always easy. Even by going through the detailed system outlined in Inc., and comparing the needed skills for the position with the current market rate, there are still instances when a coveted prospect wants to negotiate. Spolsky discusses the limitations of the system in light of our current employment practices:

Our system was put to the test over the past eight years when the labor market was tight. It’s easy to see why: Suppose you hire 100 yak drivers at $10 an hour, but then the Tibetan economy heats up, and you have trouble finding more yak drivers. The market rate might rise to $15 an hour. The weak-kneed thing to do is to hire new employees at $15 and hope that the senior people don’t discover that the rookies are making more money than they are.

This is technically called salary inversion — if you’re the kind of person who likes to use self-important HR jargon. Salary inversion can lead to strife within an organization. It can also completely warp the relationships among managers, HR, and employees. This may seem ridiculous and sound apocryphal, but I actually once heard that managers at a major corporation told their key employees to quit and reapply for their old jobs, because the bureaucracy had made it nearly impossible to give them raises that reflected the competitive job market. At Fog Creek, we decided that the right thing to do when the labor market tightens is to give raises to everybody at the same level.

Is that a hard decision to swallow financially? Oh yeah. But as Spolsky points out in his piece, it is a lot easier to swallow that than to explain why an unproven new hire is making $15,000 more the person who has given her or his sweat blood and tears for three years prior.

Women’s Wage Wars [Forbes]
Why I Never Let Employees Negotiate a Raise [Inc.]

Earlier: Corporate Women: The Wage Gap Starts At Graduation
How We Livin’: Marie Claire Crisscrosses The Globe Looking At Women’s Paychecks