Of course salaries shouldn't be secret - everything like this should be in the open and you should be able to talk directly to your boss about contributions to the company that you have made over and above those who are earning more than you. This also helps when in most societies women are paid substantially and illegally less than men for the same job.
This prudish idea of not wanting to talk about money is not a good enough one to stop people from being able to value themselves against their peers. After an initial period of concern everyone would eventually stop worrying about this system as disparities were corrected and fairer wages were introduced.
Is there a reason not to have open salary information?
Sorry, don't agree. It is bad for negotiation and getting a favourable outcome for yourself. Unless you actually want everyone in a society to make close to the same amount of money (which is how they roll in Norway, and if you dare make more, they'll basically just tax it away), which I don't think is great, I'd much rather not have anything be public.
In fact, I would never want to live in a country like that.
The people that want to figure out how much others are making can figure it out. From a negotiating position, you're much better off not having your salary be public, than the other way around.
Also, you want to have some inequality in western society (not crazy amounts -- basic needs of everyone should be met), because it motivates people to achieve things. If there's no reasonable reward waiting for you at the end, why even bother?
Norway has high income taxes, high capital gains taxes, wealth taxes, crazy taxes on (luxury) cars, high VAT, high taxes on alcohol, etc. Where's the reward? The warm fuzzy feeling you get from working hard? Hell, where's the fun? I don't see how one could ever be an entrepreneur there. Even if you win, you eventually lose (wealth tax), unless you move away.
>> It is bad for negotiation and getting a favourable outcome for yourself
Sooo, your main argument against this is not some privacy concern, but only the perception that it would somehow help your salary negotiation. When relying on a lack of data/information, the only one that gets increased leverage is your employer, not you and your smart argument of "you just don't need to tell the others, boss <wink>".
>> which is how they roll in Norway, and if you dare make more, they'll basically just tax it away
Norway's tax rate is on par with other Nordic countries: high but nothing exceptional, and you get plenty of benefits (basically you get what you paid for). It's not stopping anybody from trying to make it. As a matter of fact they have one of the highest rate of millionaires per inhabitant (close to 200k for 5M).
You can share salary data with your peers if you wish to do so and you think its in your best interest. Norway is largely a socialist society and they accept being heavily taxed and publicly sharing salary data. Taxes are on par with Denmark, Sweeden and maybe Finland. English/US culture is different and more capitalist. It encourages individuals to do better for themselves, it encourages competition, just like in nature.
They have the highest millionaire rate per inhabitant mainly because it doesn't have many inhabitants and it's an oil rich country.
Where the vast vast majority of creatures are either predated or die of hunger.
Arguments that depends on replicating evolution, socially, are either naive or highly morally dubious. Eugenics would, of course, lead to more populations with more 'desirable' traits: healthier and more productive, on average. That doesn't stop it being repugnant. Economic eugenics in the service of higher GDP is no better.
Sometimes I feel that every place with even minimal welfare is bound to be defined a socialist country, eventually. By that logic, Trump could be a fascist, Renzi is a commie, and so on.
I think basic welfare and good free healthcare are basic human rights. But tax-wise, Norway is about as bad as it gets. And I am obviously aware those services need to be paid for, but a lot of it has to do with policy as well.
It's probably a decent tradeoff for the average Norwegian, but not for anyone who wishes to (eventually) live off of investment and/or (semi) passive income.
A lot of these taxes don't serve any purpose (and generate very little revenue) and merely exist to stop or limit certain behaviors. Why are luxury cars taxed a lot? They don't want people to drive a Porsche or an Aston Martin, because some people would feel bad they can't afford those cars. Why is alcohol taxed excessively? They don't want people to drink (too much). Why is there a wealth tax? They don't want people to focus on getting rich. Etc
One simple example is a wealth tax: hard to verify whether people are reporting their true net worth, hard to enforce (takes a lot of manpower to check everything), and it brings in very little. In France, the wealth tax barely covers the cost of enforcing it. That's a policy decision, i.e. we want wealthy people to pay X% of extra tax. But it's not a sane decision.
As a Norwegian that aspires to eventually live off investments and passive income, you do have some salient points. We could probably have a significantly cheaper public sector; hiring for the public sector during the last decade has been ridiculous. Counter-cyclical spending during times of economic crisis should not be performed by hiring people for permanent positions with some of the strongest labor protections in the world; you'll never get rid of the expense when the cycle turns back.
And don't get me started on the wealth tax; it's a good and probably necessary idea in the long-term, but here it's both (1) too high; at 1% p.a. it's in effect an extra 25% capital gains tax on top of the 29% which is taxed directly, and (2) assets that "everyone" own (real estate) are only taxed at 25% of their market value. And debt is deducted at its full value! Buy a million dollar home borrowing $250k, and you pay no wealth tax at all! So you are allowed to be a real estate millionaire (and receive tax-free income on rent from your primary residence), but not a stock fund millionaire.
To everyone's big surprise, real estate has appreciated much faster than other assets (20% in Oslo last year), mostly evening out the post-tax advantage over other assets.
The tax on investment income was recently reduced by three percentage points to make the system more similar to other parts of the EEC, but a multiplicative factor was introduced when calculating the "taxable value" for stocks and funds, in effect increasing the tax by two percentage points. I never quite understood this move.
I am proud of our universal healthcare system and our welfare system -- in effect it's a means-tested basic income system; no one starves or freezes -- but some tax policies feel really oppressive if you are trying to do something ambitious.
Very nice example, and you can clearly see how market distorting the wealth tax is. In a post below you wrote it triggers from $175k, but the value of a property is only counted at 25%.
Purchasing property is essentially a tax avoidance mechanism to avoid the wealth tax on cash, and in turn leads to a massive property bubble (probably because the wealth tax cap is relatively low, and it hits a lot of people / families).
Even if you don't really want to invest in property, it makes sense to do so, because otherwise you'd just be paying wealth tax. Add to that that you can probably lever it up easily (e.g. buy something with 20% down) and.. you get a recipe for disaster at some point.
I wouldn't drive a Porsche or Aston Martin in Norway during winter. I'd drive it in Monte Carlo.
Alcohol is probably taxed because during a six month winter with 16 hours of darkness just about anyone and their mothers would develop chronic alcoholism.
Of course a wealth tax brings very little because anyone wealthy enough would move their assets to other countries with lower wealth taxes. Tax the rich is just an excuse to tax everyone else.
This is literally false. Socialism entails worker ownership of the means of production. Norway is a social democracy, not a Socialist society. It's worth remembering that in Marx's time, Socialism and Communism were synonymous.
It is socialism to the extent that the means of production is in fact largely publicly owned- or rather than owned, the fruits thereof is publicly redistributed via taxation.
This definition would fit nearly all so call capitalist economies too, which shows wr have VERY FEW purely capitalistic as well as purely socialist economies, although thr latter do exist more frequently in history and a few crazy places.
It's actually the amount of state control vs. free market forces that defines if a country/society is more socialist or rather more capitalist. Look at France and the UK for instance.
The US is not such a good example because big companies and lobby groups are actually in control, just like the state is in China.
> It's actually the amount of state control vs. free market forces that defines if a country/society is more socialist or rather more capitalist. Look at France and the UK for instance.
Are you suggesting that the UK is or is not socialist?
Are taxes in general anti-capitalist? Is publishing salaries anti-capitalist? When I think of anti-capitalism, I think of government owned entities, government backed (directly, or via regulation) industries, and things like tariffs. I know Norway qualifies as socialist for other reasons, but i don't see high income taxes as a stand-alone reason. Is that a reasonable argument?
> It encourages individuals to do better for themselves, it encourages competition, just like in nature.
Nature is savage and cruel. I think there are better arguments to be had in favor of capitalism.
>It encourages individuals to do better for themselves, it encourages competition, just like in nature.
Oscar Wilde argued that Socialism is what would push individuals to do better for themselves individually.
Further, if you're interested in the "nature" argument, Russian anarchist philosopher Kropotkin has written about it in The Conquest of Bread and Mutual Aid, in which he dismisses these ad natura arguments.
Yes and so does in capitalism. Some forms of cooperation are having a distribution chain for your products; other forms are called price fixing. The difference is that in capitalism cooperation occurs naturaly while in socialist societies it's largely state regulated.
Is there any evidence for this? Some prominent Socialists would disagree with you, especially anarchist ones, such as Bakunin, Kropotkin and probably even Marx and Engels themselves.
>> When relying on a lack of data/information, the only one that gets increased leverage is your employer, not you and your smart argument of "you just don't need to tell the others, boss <wink>".
This makes no sense. Why wouldn't you be able to figure out how much others are making? There's plenty of data you can gather, online and from talking to people. Just because data is not public doesn't mean no one is willing to share how much they're making.
If I'm making $50k, and I tell a new company I want $100k at a new job, there is no way that will fly if they know you're making $50k. But with opacity on salary, proper arguments and decent negotiating skills that is definitely achievable.
One example: as a consultant, I have (in the past) easily doubled and/or tripled my rate at times, just based on the setting and by negotiating well. That would never work if everything was public. And in the end, the client was extremely happy with the result + I was happy with the (way above average) increased rate.
>> Norway's tax rate is on par with other Nordic countries: high but nothing exceptional, and you get plenty of benefits (basically you get what you paid for). It's not stopping anybody from trying to make it. As a matter of fact they have one of the highest rate of millionaires per inhabitant (close to 200k for 5M).
Perhaps. But that's also because of the problematic real estate bubble in Norway and Oslo. In a country where everything is highly taxed, certain asset classes (in this case real estate) get distorted if they are taxed lower.
Add to that the reserves in their sovereign wealth fund, and you end up with many millionaires.
There's a reason why Tesla was selling a ton of cars in Denmark, and sales plummeted (down from a few hundred to 6 of 8 cars in 6 months?) when they got rid of the tax credit.
Benefits and healthcare are great and important -- I'm not saying you need super low taxes. What I'm saying is, if you don't specifically need to be in Norway to build out your business, e.g. it's something internet based, there are better countries to base yourself.
Norway is a great country to visit though. I (personally) just couldn't live there, because I don't think the model of such a society would work for me. It's great to be able to have a bottle of wine with friends in a restaurant, without having to pay €300 for your meal + drinks in an average restaurant.
I think your prediction of how things would play out is just wrong.
Employers usually have an HR team that is dedicated to knowing what the labor market looks like. They may not know exactly your previous salary, but they keep very up to date tabs on industry trends. They also know exactly how their current human resources are paid.
You know nothing except your past salary. They have more cards than you do.
Public salary means they know your past salary, but it also means you know what they pay their current employees, and can negotiate accordingly.
The only way this is not beneficial to any given employee is if they think they are a huge positive outlier.
edit bc hn limits me if I post like 3 times in short succession:
I don't think you understand the public policy implications of this.
The vast, vast majority of people aren't negotiating 20k increases. And people who are negotiating far more, like CEOs, do fine even with public information out there.
The equation here is one of giving employees more bargaining power over employers. An insignificant proportion of employees currently benefit from secrecy, and many of them aren't even sure they benefit, they just suspect they do.
If it's all "rounding errors", as you say, consider how this alters the dynamics between you and your bosses, not only between you and your peers.
I think your prediction of how things would play out is just wrong.
Employers usually have an HR team that is dedicated to knowing what the labor market looks like. They may not know exactly your previous salary, but they keep very up to date tabs on industry trends. They also know exactly how their current human resources are paid.
Hm? It's correct in my experience. People can get massive raises on the order of 50% or more just by keeping quiet about their past salary.
If they pull some "We need an answer in order to move forward with the job" nonsense on you, tell them your past salary was $1.
Is it hard to believe that the new team's salary fluctuates by as much as $50k solely due to negotiation?
If a company wants someone, and that someone doesn't want to go, negotiation and salary fluctuation is what happens. I think $50k is on the low side of what the disparities could end up being. (See the recent craze of poaching AI talent.)
I'm being hired for my software skills, not my negotiation skills. The fact that negotiation is so important is cargo culting from business-types who benefit from it.
(I happen to be quite savvy at negotiation, but I've seen many shy people exploited because they're not as cocky as me).
More to the point,
1) If my team was hiring a new guy with skills indistinct from mine for 50k extra, and I found out about it, I'd ask for a raise. If they refused, I'd quit on the spot.
2) If the skills are indeed a whole class above mine, they'll probably have a different title, and it's much less of my concern (I wouldn't call it "a fluctuation among members in my team").
Information may not always make things better, but it always -- no exceptions -- makes a market more efficient.
Moreover, stop focusing on two team members fighting against each other. The big prize here is employees finding out how much their bosses make, especially when it comes to "tightening belt" periods. I don't honestly care if Jeff-next-door is getting 20k extra because he plead for his newborn, but I absolutely care if my salary gets frozen and my boss gets a bonus.
Opponents to salary transparency are basically arguing for an inefficiency that favors higher-ups, preying on the ignorance of less resourceful subordinates.
So what you're saying is that there basically is no room for negotiation, because it would deviate too much from the standard scale? e.g. a company needs someone for X, and will fix pay around €XX,000.
At any big company, you need to make sure they want to hire you first. Once you have done that, pay becomes irrelevant because mentally they have already hired you. It's a rounding error on a budget. And it often is not even their own budget.
You would be surprised at how easy it is to negotiate a €20k salary increase by just saying: I'd love to work here, but we need to figure out a salary range that works for both. And if they lowball you (which they probably will), you just counter and take it from there.
There's another scenario that is becoming more common, especially in the company where I work: Changing countries by changing jobs. The markets are dramatically different so any salary comparison makes no sense. Instead you have to compare level and experience, which is what we should be basing salary decisions on in the first place.
> It is bad for negotiation and getting a favourable outcome for yourself.
This means that you believe that you are stronger by negotiating alone just for yourself rather than collectively negotiating as a group of people? How can this work without you winning being to the detriment of others?
I know that a lot of people think like you, but I strongly believe that you are wrong. Historically, the individualization of the negotiations between employees and employers is always to the benefit of the employers, not the employees. The negotiation of one's salary is not an equal to equal negotiation, at least as long as there are unemployed people and the society we live in requires people to be employed to live decently.
This is exactly why people in France were against the "loi travail" of the previous government, and still are against that of the current government: because one of the main objective of these laws is to inverse the hierarchy of norms. This hierarchy stipulates that the labor legal code is above sector/industry-specific agreements which are above individual contracts. This means that a contract can only be enforced if it is more favorable to the employee than their sector's agreements which in turn are only enforceable if they are more favorable to employees that the labor legal code. This is how you can enforce a nation-wide minimum salary for example, or any other social rights for that matter (good social security, good retirement plans, etc.).
> I would never want to live in a country like that.
Having some close family living in Norway I can assure you that you are very mislead about how people live there. You know, there are other incentive to work hard than money. Happiness is not measurable with money for everyone, and working hard is not necessarily one's life ideal :).
What I believe he's saying is this (charlesdm correct me if I'm wrong):
- Management values Alice 100 (by values I mean - we're willing to pay at most that much to keep her)
- Management values Bob, Fob and Gob 50 each
- Bob, Fob and Gob realize Alice is more valuable, but they don't think she is 2x more valuable
If you've worked in development you likely know that difference in value of developers can be massive, but the ones with less value usually don't perceive themselves as being THAT much less valuable and would have a problem with someone they consider a peer being paid 2x their salary, that's just how things are.
If they all negotiate separately in secret, Alice can get her 100. But if salaries are public, management knows Bob, Fob and Gob will be resentful if Alice gets 100. So a new effect is introduced: the cost of giving Alice 100 is no longer simply 100, it is 100 + the cost of making Bob, Fob and Gob unsatisfied, introducing drama and perhaps them not being willing to work for 50.
So what might happen is:
- They will pay Alice 85
- They will pay Bob, Fob and Gob 55
At first glance this might seem like it doesn't make sense, and that it would be economically irrational for the employer to pay Bob, Fob and Gob more than their perceived value. But this additional 3*5 is actually the price of giving Alice more money to keep her without causing drama. Alice is still effectively costing the employer 100, it just doesn't all go to her. Alice should be rationally paid at most the amount 100-3x at which the satisfaction of the other 3 employees with their pay being 50+x instead of 50 balances out their dissatisfaction with Alice being paid more at 100-3x. Alice is basically causing the cost of other employees to grow and has to pay for this. As long as the company is paying Alice 85, the cost of a 50-employee is raised to 55, making Alice effectively cost 100 with 3 other employees.
In reality, 85 might be 90 and 55 might be 60 because the additional information the employees now have gives them a stronger overall negotiating position, so the average salary level would likely go up. But I believe Alice would still end up "subsidizing" Bob, Fob and Gob. It would be dishonest to claim that the effect I wrote in italics does not exist.
I believe the effect of public salaries, all else equal, would be to move the average a bit up, but also greatly lower the variance.
And just so that this isn't purely hypothetical: at my first job, they refused to pay me more than a certain amount because some employees who had been there much longer were being paid that amount. I was literally told this, and my boss even acted like I was somehow being a dick for not agreeing to that number and quitting over this. They had no problems giving me that number but let me quit rather than go over that number. So in reality, an even worse case happens than the one described above, because they either didn't consider the option of giving me less than I was worth and distributing the difference or they thought they couldn't afford me long-term anyway, and if they did what I described above they would just end up stuck with those raises they gave to others (these people were "lifers") after I eventually left.
So in effect, to have any chance of being paid more in line with what I was worth, I had to quit and move to a different company, even though the first company did realize my value, it is just that because of the effect I described, the cost of paying me what I was worth would have been much higher than just the amount of my salary. They acted rationally in insisting on underpaying me.
> If you've worked in development you likely know that difference in value of developers can be massive, but the ones with less value usually don't perceive themselves as being THAT much less valuable and would have a problem with someone they consider a peer being paid 2x their salary, that's just how things are.
This is a great comment. Pro sports is an example where knowing salaries is fine because there are a lot of objective measures of talent. People generally know where they fall in the order.
> Pro sports is an example where knowing salaries is fine because there are a lot of objective measures of talent.
I would argue that although recent advances have made this possible, it is generally not the dominant mechanism.
Simply I think even with the hard data showing exactly what each team member did, it is still a long leap to valuation. Contribution is still hard to identify in any team sport, even if you know what everyone actually did.
When it does come to valuation, there's a major problem. New entrants have some data to support their value, but they have not been tried in the same pool as veterans. This will most likely lead to the new entrants coming at a discount, as managers will be risk-averse. Or call it model-conservative, since they objectively don't have the data.
Good points. I guess I was thinking along the lines of a Kerr and Jordan. In no world would Kerr argue that Jordan should not have been paid more than he does. Jordan is clearly the player who carries the team.
But, I could see it become more challenging at the mid-level or when on teams with a 1a, 1b type of dynamic.
So I moved to a development hub, coming from a low paying country, and because of that I received a 0.5 X salary, where X is what I believe my value to be.
Naturally, I was highly unsatisfied, so I started looking around. Eventually I passed a couple of interviews and requested 0.7 X, hoping to gradually get to my true valuation.
But in a big surprise, a very well known company actually gave me 1.0 X, even if I only requested 0.7 X, them saying that they have this internal system where they try to match salaries based on their perceived value, and not on you negotiating position.
Let us not forget that most developers are very bad at negotiating salaries.
Secret salaries are highly asymmetric, because they are only secret to one party. So as all asymmetric information, it will be exploited for benefit.
I don't see how this is related to public salaries.
If the first company you mentioned doesn't make their salaries public, while the second one does, if this is even the case (can't really tell from your story), that sounds more like a coincidence than anything else.
I'd even expect a company that pays people exactly what they believe them to be worth to be less likely to make salaries public, because then seeing you are paid less than someone else would directly tell you you are valued less.
It is related to your personal anecdote, that you couldn't get a bigger salary because it would have surpassed the salaries of other employees of the same perceived value as you.
With my personal anecdote I was showing that this can also work in your favor, and under some reasonable assumptions this will increase the average salary and decrease the variance as you suggested. The only losers are good negotiators or persons with good pedigree, because they win at the expense of others.
BTW, the second company I mentioned doesn't actually have public salaries, just matched salaries for similar perceived value. So I still don't know what people above/below me or on different tracks make.
That is entirely true and I wrote so myself in my first comment in this thread. But this comment was about something completely unrelated (specifically, about public salaries potentially screwing over people who are able to negotiate a high salary)
> I believe the effect of public salaries, all else equal, would be to move the average a bit up, but also greatly lower the variance.
It might, and that doesn't seem to be problematic, to me. The arguments about individual negotiation and proven value and all that don't change when salaries are public. In fact, the "savvy individual negotiator" argument might even be more applicable in that case: if Alice's market value is really 2x Bob, Fob or Gob then she should be able to demonstrate that quantitatively and be able to use that data to negotiate her appropriate value.
The argument about developers' ability : value relationship is also a bit specious. I'm not convinced there actually is a good way to measure that, and even if there were it's very likely to be context-specific (e.g. some developers are going to exceed at systems programming or low level library development but might be marginal at best when tasked with design and implementation of systems that rise outside of that scope).
I don't think it's Alice's responsibility to demonstrate her worth to her co-workers. If the company really thinks Alice is that much more valuable, they should easily be able to demonstrate that to Bob, Fob, and Gob. E.g. Alice should have more responsibility. If the company can't explain to Bob, Fob, and Gob why Alice is better, I think that's the company's problem and Bob, Fob, and Gob are right to be upset.
Management needs to be honest with everyone and explain why Alice is so valuable. Maybe then they would get more of what Alice brings to the company. And they need to pay her the maximum they think they can; because everyone knows her salary she is constantly being offered more money by competitors and recruitment firms to move. This makes her yearly salary negotiation with her boss easier, not harder. YMMV.
I understand all very well that and I even believe that what you say is (simplified and idealized [see below] but) true. I'm not arguing on facts (not now), I'm arguing on political opinion about what is best for society: I prefer people cooperating together (e.g., to build a decent social security system) than competing against each other (like in your examples).
> It would be dishonest to claim that the effect I wrote in italics does not exist.
We totally agree on that, except this is one of the reason why I'm in favor of public salaries :).
A question that might be worth asking is: why do one would need so much more money than others have?
If it is because life is expensive and you need this much money to live decently, eat sane food, have your kids educated, pay for your own health care, and put money aside for your retirement, then what do we do as a society for those who can't have this much money? Alice may be twice as productive as Bob, Fob, and Gob, but are her life and the lives of her children twice as important that those of the Xobs and their children? I think this is actually the point of disagreement in our discussion.
In practice, if people cooperate, they can collectively (I'm talking nation-wide, not company by company) obtain good social security, free education, good and affordable health care, good retirement plan, good public infrastructures, etc. All this would be paid for by social contributions, which could lower people's direct salaries, but those social contributions are nothing else but indirect (and collectivized) salaries.
In such a society, what is the point for Alice to be paid twice as much as the Xobs?
Now from the discussion I know that the counter argument to my point would be that if Alice is not paid twice as much then why should she bother being twice as productive? My answer is: good for her! If she really likes her job then she doesn't need money as an incentive to do it as working is what makes her happy. If she doesn't like her job, then she's better of working less. And an additional Xobs can find a job doing what Alice isn't doing anymore because she neither needs nor wants to.
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[] Now I'm getting back at why your example is idealized: secret salaries and the necessity to individually negotiate for your salary is known to have undesirable effects, such as women being paid less. Studies show that in our cultures and societies women are undervalued and have a tendency to underestimate themselves, while men have the opposite tendency. So in practice it may not be Alice who is paid more than the Xobs, even thought she's twice as productive.
> My answer is: good for her! If she really likes her job then she doesn't need money as an incentive to do it as working is what makes her happy.
Maybe she's just good at something, but doesn't actually like her job? More money now means less work later on. Or she could achieve the same results as bob, fob and gob, in half the time, thus work 2.5 days a week.
Why are people so focused on equality? All people are equal, but their ability isn't. Some people are better at sports, others are better at intellectual pursuits. Some have better social skills, etc.
I'm good at building stuff, but not so good at playing sports. I would expect to earn much more building stuff than I do playing sports.
Aside from the material discussion (I don't really care about that), having more money in the bank means 1) having more leverage in negotiations, and 2) more freedom. And past a certain point, it means independence. You'd be surprised how many people make 100K+ a year from investment, just living a full life (e.g. seeing their kids grow up) and doing what they love.
Work can be fun, but it's still work. To me at least, half the fun went away when I had to start doing it for money and because of this I reorganised my life to account for that.
My opinion is that income solidarity should be achieved through the tax system. This way it can be fine-tuned to the wishes and needs of the society and everything is "clean". Additional sources of "hidden" solidarity like my example with Alice are in my opinion unnecessary and counterproductive. Companies should be left to pay people exactly how much they value them to ensure maximum efficiency, then taxes can reduce these differences to the extent the society desires.
Politics aside, even in a system where every company must have public salaries to avoid disadvantaging those who do, the system would still be inefficient. A company that hires only "Alice-level" developers can pay Alice 100 as they pay everyone roughly that amount. They don't suffer from this effect. A company that hires Bobs finds it hard to hire and keep some Alices (exactly what happened at my first job, I wasn't the first nor the last young guy in that position to quit quickly when I realized what the deal was) as long as it mostly hires Bobs. And Bobs also need to work somewhere. This basically gives companies a strong economic incentive to stick to a similar level of talent when hiring, which is a market inefficiency, and to developers of similar skill level to accumulate in the same companies. So with time, Alice ends up working at a company with other Alices and they are being paid 100, while Bob is working with Fob and Gob and being paid 50.
This is actually an aspect of another, more general problem with salary solidarity: if you overpay your lower-value employees, and underpay your high-value employees, this gives the lower-value employees the incentive to take the job and stay forever, and the higher-value employees the incentive to not even accept the job or eventually leave for a job that doesn't underpay them. Over time, you're accumulating lower-value overpaid employees. Government jobs are an extreme example of this problem (in my country at least) as there is a high level of salary solidarity there. Paying people what they're worth in gross salary, and then achieving solidarity through taxes at least solves this problem within 1 country. It still doesn't solve it internationally (as the highly productive people still have the option to jump ship to countries with less solidarity, but this is not as bad as people are not as quick to emigrate as they are to switch jobs).
Norway has extremely high salaries, and income tax that is pretty much equivalent to California (about 1/3 of your gross salary after deductions), in fact Norway is one of the easiest countries to become rich: https://www.youtube.com/watch?v=A9UmdY0E8hU
You could argue that radical financial transparency is what causes this.
Summarizing the most important Norwegian taxes, which are in aggregate higher than California's:
* 25% VAT on everything except food, which is 12%. Electric vehicles currently exempt
* 40% income tax on average including 8% public pension contribution. Highest marginal tax on income is 47%, which applies to incomes greater than $116k.
* Employer has to pay 14% of your salary as employment tax. Company profits are taxed at 24% (this is separate from the capital gains tax). Stock-based compensation is taxed as income, so no possibility of weaseling around the employment tax. You won't get stock-based compensation unless you're in a startup or a C-class executive at a (big) private company. The wealth tax does weird things to the valuation of stock options; they'll almost always be worthless unless your company is sold or goes public.
* Net assets above ~$175k are taxed at 0.85% p.a, primary residence contributes only 25% of its market value to net assets
* 29% capital gains tax, primary residence is exempt as is most tax income from renting out primary residence. Sell your home with $1 million profit? No tax.
* On average ~$10k tax on all new motor vehicles, electric vehicles currently exempt
* A tax of approximately 30% (~5 NOK per liter) is applied to gasoline, in addition to the 25% VAT. Annual tax of ~$1000 on all motor vehicles, increasing with how good the vehicle is. Electric vehicles currently exempt.
* Various taxes on alcohol, tobacco, air travel. Some municipalities have a property tax on the order of ~$500 p.a. for an average residence.
Yes, cars, alcohol and food are _much_ more expensive in Norway, mostly due to taxation, and to a lesser degree the high cost of labour.
Norwegian income tax is subject to a lot of deductions, so in practice people will never pay the full whack. In fact the average income tax has been estimated to be under 30% http://www.smartepenger.no/skatt/653-skatteprosenter-pa-lonn... (Norwegian language article)
The reward is being top of the budget per capita: https://en.m.wikipedia.org/wiki/List_of_sovereign_states_in_... The goverment has $48K to spend per capita, as opposed to e.g the UK which has $18K. Off course that means little if the gov does not spend it well. But from my experience, it was though not perfect.
> I don't see how one could ever be an entrepreneur there.
High salaries is an issue, as well as few VCs, especially angel investors. But one can also take risks with the safety net of a well funded wellfare to fall back on.
> Even if you win, you eventually lose (wealth tax), unless you move away.
Capital tax is far from losing, just an annoyance, that I wish they could forgo.
A lottery ticket is still a lottery ticket, whether you acquire it at a gas station or though your options agreement.
Don't advocate for damaging the fabric of society where everyone should struggle for some Libertarian fantasy that anyone can be fantastically wealthy with enough grit; it's mostly luck.
Nevertheless, Norway have entrepreneurs and people getting rich, and overall it is a very wealthy country. I believe the social mobility is better then in the US. So I guess some of you assumptions must be wrong.
Is there a reason not to have open salary information?
If any future employer or recruiter could see how much I'm currently paid (as in Norway) then that would place significant downward pressure on my salary over the long term.
Thinking longer term again, I think public record salaries combined with dynamic pricing, facial recognition and a cashless society is a combination of things most people should be worried about.
Can you elaborate on why do you think that it "would place significant downward pressure on my salary" ?
I agree that in a particular single negotiation if it just so happens that they have this information then it could be a significant impact one way or the other (depending on what that history is) - especially since there's an information asymmetry since they know what you're making but you don't know what their other employees or the other applicants are making.
However, if it's a policy so that this information is available for both sides in every negotiation for everyone then it doesn't seem that this should fundamentally change the average pay in any industry. The core supply/demand factors are the same, and for every instance that might lower the wage there's are many cases that would have an upward pressure, i.e., the underpaid people can now objectively see which other companies pay better, and such employers can't simply rely that long-term loyal employees will be ignorant about the market rates as they do now.
> The underpaid people can now objectively see which other companies pay better
You mean, the ignorant people who don't care about pay, can now demand more? If you are being underpaid, it is because you don't care enough to 1) figure out what market rate is and/or 2) negotiate better. Salaries being public or not. No one deserves anything in life and you often get what you negotiate -- there are plenty of people who don't understand this.
Just because other companies (publicly) pay more, doesn't mean they will get the same pay as the other people are making.
How on Earth do I, personally, "figure out the market rate" for my job? The market gives me either no information or false information (at the very least unverifiable and untrustworthy information). I can ask my coworkers their salary I have no idea if they are being truthful if they answer (which they won't). I don't live in San Fransisco and I don't have any personal friends in the industry (and friends lie too). Software engineering jobs don't come up often here and when they do a salary range for the position isn't posted. If I am offered a new job my position in the salary negotiation is reduced since I still don't have any information about typical salaries, so we are at a catch 22. Additionally, I wouldn't want to actually negotiate salary for a job I'm not interested in because I'd like to not be known as the person who is constantly getting job offers then rejecting them, the market I small here.
And unfortunately the tabloid press would use this to attack people why they don't like or disagree with - Norway does not have a nasty tabloid press like some other countries.
It could also be used by criminals scoping out targets for burglary
Finland has the same system as Norway, and Finnish tabloids are full of the incomes & taxes of the rich and famous every year once the tax records come out. Last year, one of them published the tax records of all Finns earning over 120k EUR/year:
Not sure what that has to do specifically with publishing the incomes of rich people. Also, in general, Finnish yellow press is really damn tame compared to "real" tabloids like those in the UK.
Celebs and the so called metropolitan elites or judges who might take issue with Rupert Murdoch, Paul Dace and the Barclay Brothers and thus put themselves in the presses firing lines
You pay taxes to the government on those imaginary private deals, right? I think mostly the salary thing is about feeling awkward rather than it being about privacy.
Why does your salary deserve to be kept private? I'm trying to think of a reason that isn't some people feel awkward about it being open? If salaries are open I think that would go away and people would be more free to talk about money.
Finally in almost every company I have worked in everyone tries to work out what everyone else is on to better negotiate their own salaries, it just makes it difficult to mention...
I can see scenarios where you have someone in your extended family/friends who constantly attempts to leech money off you because they know you have it. This is something people who win the lottery often face which is why (in the UK) they can choose not to make their win public.
More fundamentally, you pay taxes on your private deal with your employer but the government is just a third party involved in that transaction, the same as your bank. Neither the government nor your bank makes the amounts of tax you pay or what you earn public, them knowing doesn't really impact your privacy in any meaningful way. I don't quite understand how you've got from "well the government knows what you earn so everyone should!".
I don't consider that something being a "societal good" automatically overrides peoples right to privacy, different people will consider different things to be private, many would consider that my personal medical data would be better off open to the public in fine detail as it would help medical research but this is generally not the case (in the UK at least) and neither should it be.
Why should how many times you have intercourse per week be kept private? I'm trying to think of a reason that isn't some people feel awkward about it being open? If how many times you have intercourse per week is open I think that would go away and people would be more free to talk about their sex life.
See how it goes? You could literally use the same argument for any privacy concern ever.
However, this isn't the same thing and there is no benefits for other people knowing that I can think of; there may be lots of benefits for knowing everyone's salary.
I just gave you a benefit, people being more open about their sex life could be a good thing for society. Should we force people to tell how many time they have intercourse then based on your logic?
Ok, so all benefits are equal, and all drawbacks are equal? We as a society can't do anything that's not beneficial to absolutely everyone?
I posit that a few things are not that harmful to make public, except in some cases that varies for each individual (like being in a witness protection program) if someone already has the means to identify you as you (such as a full name). Some of those things would be your address, what vehicles you own, wether or not you have stock in corporations, wether or not you're married, your age, your level of education and some other things. I don't see how the knowledge about these things can be used to blackmail you through social stigma, unless you did something illegal. I have the same feeling towards pay checks.
The discussion is wether or not pay checks are too private to disclose publicly, not if it's ok to release everything about everyone.
> We as a society can't do anything that's not beneficial to absolutely everyone?
Are you aware that laws are enforced by government force? That is to say, if you don't obey to a law, cops will be sent to your house and if you resist they will point guns at you and shoot. This is a non-controversial fact that both leftists and right-wing economists, politicians and philosophers agree upon.
Now, with that in mind, I don't like guns and I think they should only be used in extreme situations. I don't consider knowing people's paycheck to be one of these situations where gun violence should be used and therefor I'm opposed to this law forcing people to publish their income as I think gun violence would not make sense in this case. If people do not want to publish this private information, then let them be. That's just my opinion though, if you believe it is worse it to kill people who resist giving up the amount of their paycheck (because that's how every law is enforced if one resists), then you're right, this law is great.
Not true, you could make it a tort instead of a law, where employees can sue for punitive damages if secret negotiations have occurred. No guns necessary.
Really? A tort will get you a fine, refuse to pay it and they will send you to jail, resist your arrest and they will use their guns. No way around that.
Not every attempt at "resisting" the force of law results in being shot.
You're stretching the concept of the monopoly on violence and the "men with guns" metaphor to absurdity, when the "violence" in that context involves all compulsory interactions with the state, including mere arrest and detainment, or even having to buy postage stamps to send a letter.
This isn't really how it works, we don't have debtors prisons. If you don't pay a civil judgement against you then the debtholder gets permission to garnish your wages and bank accounts or seizure your assets. If you have no wages, bank accounts, or assets the judgement doesn't get paid.
Not really. Wealth inequality is a problem. Income inequality not so much. Whether someone makes $100k a year, or $500k, or even $5M a year is irrelevant. In the grand scheme of things, even $500m is pocket change.
The problem is with major wealth holders, e.g. people or families with assets in excess of say $1bn, who generate disproportionate gains when held to the effort they put in.
Making $50m a year with $1bn isn't hard. I can do that. But those people don't spend that $50m in extra gains. It accumulates. And you get a massive snowball effect.
Compound interest is great and a pillar of capitalism, but past a certain point it can get problematic.
In Norway and the rest of Scandinavia (Swedish here) you get data on all the income, even capital gains. Even some benefits that you have to pay taxes on is included here.
The capital gains can be offshored, so it won't be in Scandinavia and the ones benefiting wouldn't pay taxes there but rather small change in the Bahamas or Cayman Islands. People with lots of wealth are used to this or they can definitely afford to pay someone who is.
Relevant parts of the government also know what my healthcare status is, but that doesn't mean I'm particularly keen to make it readily discoverable and benchmarkable by anyone and everyone that might wish to profit from this information.
Hacker News might just be the only place where you can see howls with rage at the thought of recruiters and HR asking them their salary in their current job with the obvious intention of not offering much more than that and arguments that this information should be accessible to everyone without question in nice little searchable databases anyway...
because of the disparity, not the information itself. if you (and everyone else applying for the job) give that info to a recruiter, the recruiter has and can act on all the info, but everyone else only has their one bit.
Looks completely out of context. Undisclosed income is black money. You pay taxes on salary/income (most of which is deducted at source). The state does and will almost always know your salary/income, period.
Even the most determined defenders of taxes usually concede that they have downsides. It's entirely reasonable to propose limits on what the State should do with tax information. As a hyperbolic (but real) example, the State also usually has access to single transactions from your friendly neighborhood sex shop.
But that does not address why the government should then broadcast that information. Obviously an income tax requires the government to know your salary, but why should it become a public record?
That's not a bad argument. I still think that its more beneficial to make transactions as public as possible, though.
Think about real estate. I think it is immensely helpful for the public to have access to the sale price of houses. Imagine if the only people who had this information were a handful of real estate agencies. An individual buyer would have to go by a few scattered, probably inaccurate, whispered anecdotes. People who aren't part of an inside crowd would be at a terrible disadvantage in negotiations.
Unfortunately, that's pretty much how it goes for salary negotiations.
Also - the two consenting adults who contract privately you've mentioned, where do they turn if the deal goes south? If they feel one side has broken the contract, perhaps tortiously? Certainly, enforcement of contracts, to an extent, is within the realm of the state. I'd avoid too much tinkering, but a few ground rules to ensure an open, competitive, and, yes, transparent market, seems very reasonable to me, and very consistent with the concept of lightweight government.
In fact, I think transparency might take care of a lot of things the government tries to manage at a more granular level downstream.
Upvote...I don't see why that should be public. It ruins the incentive to work harder as I bet companies are far more likely to pay everyone the same [no sources on that].
there is one real life example why your argument is as wrong as possible.
professors in the UC system have public salaries, like any other public employee, and it isn't a linear communist apocalypse for salaries like you think. prof still work hard to move and create departments, etc. and the salaries vary wildly, not just with seniority.
...on the other hand, senate and congress does prove your point. ironically with people elected spewing the same liberal pipe dreams against the very way they get paid and accumulate retirements.
> professors in the UC system have public salaries
Professors have public salaries because their salaries are paid by the public. I don't think anyone here is arguing against being able to know how much your employees make, that's kind of a given.
If you own a business, you don't think you should be able to pay each employee whatever you want as long as above minimum wage? Besides taxes, I'm not sure how that's anyone's business besides the employer & employee.
More likely to ruin the incentive to work harder as you realise you already get paid more than the lazy idiots that have been there for 20 years but are easier for manglement to ignore
One reason against open salaries is that people would do a poor job in valuing other people's jobs and the whole idea of fair wages would be extremely subjective.
It's not uncommon the case where an employee is frustrated with his manager earning X times more than them while doing 2h lunch meetings every day. The manager might bring tremendous business value though.
> This also helps when in most societies women are paid substantially and illegally less than men for the same job.
Any sources to back up this claim? I've seen it a few times, but whenever I dig into the source, it's usually poorly done or playing with numbers. I'll admit I've only dug into the topic a little, and most of the reading I've done has been focused on the US.
I remember reading a while back how some Google employees started sharing their salary, and I think they found there was potentially some degree of discrimination of women. I never dug deeply into it though, and I don't know the ultimate outcome. I don't deny that it could be accurate, I just haven't seen enough information to be convinced.
FWIW, I think you should be able to abstain for providing any of this information, if you want. It should be up to the person to make the choice. Personally, I'd probably be fine with sharing my salary for my workplace, but not my full taxes, which might include other sources of income. One good reason to not want to share this information is that you might not want others to know that you're engaging in other activities. To give an example which I've seen affect others, I've read of women that have been harassed and ultimately fired upon finding out that they're "camwhores" outside of work; although I'll note that I can't verify the veracity of such claims, and I haven't read of it happening in the US.
Ultimately, it comes down to being in control of the information being shared, and with whom. Ideally, I want as little information as possible to be publicly available, unless I choose otherwise. For example, I don't mind telling someone my height or weight, but I'd object to having it be publicly available. Whenever some piece of information of mine is publicly available, it's used in a way which I dislike. For example, credit card companies require you to fucking opt-out from their spam. The audacity of that is absurd.
I think information should be controlled by a trusted party (i.e. government), and people should have to information to share it freely by opting in to different programs. I fundamentally disagree with anything that requires me to opt-out (maybe with a few minor exceptions, regarding certain communications coming from the government).
Women do get paid less after birth leave, mostly because skill rot, networking going down the drain etc. The ones that stick to their career and don't have kids are paid pretty much the same amount as men. The birth leave thing skews the statistics, as for the majority of women, children are more important than pay. It's not fair, especially for single mothers.
No source whatsoever but I've read in an article linked from HN.
> Is there a reason not to have open salary information?
Well, I have a reason. My company (a mid-size publicly traded U.S. corporation) would be ashamed, if my salary was public (they don't actually pay that bad, but I guess it could be better). You see, my company is quite emotional, and I kinda like it, so I don't want to get it embarrassed. But I do fully support the right to count your own money in public, yes.
Edit: I am just playing with framing here. You should have, at least, the right to publish your own salary (and perhaps start a movement of people who do that). And perhaps companies don't want you to have that right because it would make them look bad; although if it wouldn't, why the hell not?
Disclaimer: I do think too, that eschewing to talk about their salaries hurts all of us most of the time. But...
When I saw that at a job a real bully-like dickhead got consistently underpaid the last thing any of us well paid people would have done is to tell him our numbers. The only reason he told us his salary was to make us jealous...
I think the problem is that people value themselves in different ways (and often the criteria is skewed to be more favorable for themselves). For example, I tend to extremely highly value people to whom I go for advice/help. These usually end up being people who are extremely smart and have a both wide and deep technical knowledge. They have almost always been programming for a long time and have a huge interest in the field, and have written all kinds of applications in various technologies.
At the same time, you have a lot of developers who started programming in college, read online about how to become a good developer, decided on technologies whey want to work with, read the staple books for that, wrote a bunch of applications in them, read some books on software architecture, on development process, etc, then got a job at a company which uses some of the technologies they are familiar with. Compared to group #1, they have a huge "knowledge debt" that will never disappear because they're focusing on learning things that are the most relevant to their current work. But this knowledge debt doesn't apply to everything that needs to get done at a company.
People from group #2 often consider themselves just as good as group #1 because they believe a huge part of knowledge group #1 has and they don't is irrelevant for the job. And in some ways, they're right. But they're also wrong, because group #1 adds business value by being able to solve the hardest problems and being the guys you go to for help when you get stuck.
At the same time, the people from group #1 often consider themselves much better than group #2. Which again, in a way might be right, but also wrong because group #2 might still do just fine in practice in most situations.
Of course these are not distinct groups, in reality most people are somewhere in between, being better in some areas and weaker in others, and this makes it even harder to compare 2 individuals in such a way that both of them will agree with the result.
Secret salaries allow the management to decide how much business value someone adds without having to explain themselves to 2 people who likely have skewed (each in their own favor) perspectives. It also prevents negative feelings between employees themselves. It is also good for the salaries of those that the company is willing to pay a lot, they don't have to worry about what others will say. It solves the "if I give it to you I have to give it to everyone" problem.
The downsides are that 1) salaries are likely a bit lower overall due to information imbalance and 2) people who are bad at negotiating get unfairly screwed.
> 2) people who are bad at negotiating get unfairly screwed.
I am bad at negotiating, but I always felt like this is a skill like any other.
I feel that saying people who are bad at negotiating get paid less it is like saying people who are not as good at their job get paid less. Well, yes...
Why would it be wrong if you are good negotiator and good worker to be paid more then if you are bad negotiator and good worker, or good negotiator and bad worker, or bad negotiator and bad worker... To me this seems perfectly fair.
I don't go asking for raises as my negotiation skills are awful, I get them offered to me cos I work as much as I can with highest quality I can attain.
Even if you think it's fair, people being paid based on negotiating skill is a market inefficiency so it is still undesirable.
I mean, bench pressing a lot of weight or playing the flute are also skills like any other, but we don't want software developers to be paid based on that. We want software developers to be paid based on software development skills, or other skills that actually relate to doing the job.
But those are not related to the software development, while negotiation is related to work in general.
Someone who lifts weights is also responsible to negotiate a contract with his manager.
I guess the question is then how do we decide which skills should be artificially governed based on how good they are for people?
And lets take another point of view. Sales, for example, is based on negotiating skill. Do we say that is also market inefficiency and should we somehow subsidies sales person with bad negotiating skill cos that would be better for their salary?
I don't know, I still feel like having the opportunity to negotiate is what counts (meaning no discrimination based on sex, race etc to actually be in position to negotiate) while the outcome is completely dependant on person.
And if we really stretch the argument about which skills should be based for salary, we could say that it is not a software developer fault if he is not good at his job and somehow deserves to paid as the one who is dependant, for example, on years of experience.
I think people should be thought how to negotiate rather then making some artificial rules that there should be no negotiation at all cos someone is not as good at it.
I don't understand where you got the idea that I suggest enforcing any kind of artificial rules on anyone. I am in fact for nearly zero labor regulation. I just said it's a negative effect, which it is.
Ideally the proportion in which a skill affects your salary is exactly the same at the proportion in which it affects job performance. Anything else is a market inefficiency.
Whether we should try to regulate it away is a completely different story.
Imagine that you are a 50 year old developer applying at some software company. You know that you don't have a lot of opportunities (this comes up frequently on HN), so you'll underbid yourself.
And a company which would be happy to hire you, and would be happy to pay you your actual value, will still accept your underbid, because they also know that you don't have many alternatives.
The problem is the notion of same pay for "the same job". In order to judge if to people deserve the same pay you have to know if they are really doing the same job, have the same knowledge, and produce an equal economic output for the company. This might be easy if you are making widgets and the only important outputs are units produced and defect rates but near impossible with more complicated work that is highly variable or more cognitive in nature.
> most societies women are paid substantially and illegally
> less than men for the same job
Source? Quite a bold claim about "most societies". And the danger of mixing up "women earn less" with "women are paid for the same job [and same amount of time spend doing it]".
Okay, well let's take the BBC as a microcosm shall we? One of the most liberal places you can possibly work and overwhelmingly all the top jobs go to men (2/3 men) and men are paid more for similar value of work.
That's the thing. These different people don't bring similar value. When you work as a tv show star the value of your work isn't what you do but how many people will listen to you. You're not paid based on your "Senior TV Show Performer" role (or whatever title is being used in this industry) but based on your personality, your past and current successes, your potential awards, your negotiations skills, etc. If you can make the company feels that you will reach a large audience and that they will get a good return on investment, your market value will go higher.
There are loads of examples within the dataset that give examples of direct comparisons (news readers for example). There is not a single female newsreader who earns anything like what the male equivalents do. I call wilful ignorance.
It’s a datapoint clearly demonstrating that women aren’t paid the same as men for the same work. I’m not sure you couldn’t dismiss every example so trivially.
The entertainment industry is one of the worst possible places to look to try and define "same work". You can easily have two people sat next to eachother where the audience wouldn't care if one was replaced but would leave if the other was. It's like saying musicians should all be paid the same.
I'm left wing and feminist as they come but this gender pay gap narrative is so consistently misrepresented it drives me mad. We're slipping into a society where all professions have quotas because everyone is terrified of a false narrative.
You probably don't know what each of the people does; someone like Emily Maitlis who earns < £150k - her co-host who does the exact same job earns up to £299k. My guess the man here doing identical jobs earns about twice as much. There are many examples of this in the released information.
This prudish idea of not wanting to talk about money is not a good enough one to stop people from being able to value themselves against their peers. After an initial period of concern everyone would eventually stop worrying about this system as disparities were corrected and fairer wages were introduced.
Is there a reason not to have open salary information?