I'll tell you my salary, if you tell me yours

Can water cooler talk help fix the gender pay gap? US President Barack Obama seems to think so.
The White House said an executive order banning retaliation against employees who discuss their pay a potential way of discovering violations of equal pay laws. Photo / Thinkstock
The White House said an executive order banning retaliation against employees who discuss their pay a potential way of discovering violations of equal pay laws. Photo / Thinkstock

Earlier this week President Barack Obama signed an executive order that would ban federal contractors from retaliating against employees who discuss their pay with each other. The White House said in a fact sheet it released that the move, one of two executive actions Obama took on Tuesday to mark Equal Pay Day, was designed to "encourage pay transparency, so workers have a potential way of discovering violations of equal pay laws."

An effort to remove whatever fear of retaliation might exist is a good thing - and good politics. And the White House was careful to note in its description of the order that it "does not compel workers to discuss pay."

Still, actually getting people to break one of the workplace's most ingrained taboos is a very tall order. People spill their guts with their cubicle mate about last night's bad date. They share pictures of themselves in their swimsuits with their co-workers on Instagram. But while they may gossip from time to time about other people's pay, they do not, as a rule, talk about what they themselves take home.

"It's considered a taboo subject that's endemic in society," says Garry Mathiason, a senior class action litigator with the employment law firm Littler Mendelson. Whether you're at a dinner party or an office meeting, he says, "there is such a strong phobia to sharing pay information."

As a result, it's not clear the president's executive order will really bring about all that much change. For one, Mathiason says, the National Labour Relations Act already protects from adverse action most workers who choose to discuss pay.

"I personally don't see it adding much," he says.

Moreover, an unwillingness to discuss pay is such a cultural no-no in society - and the workplace - that even in organisations that don't actively discourage employees from whispering about what they make, employees are not likely to do it. "I think employees assume that's part of the confidential information, that they shouldn't share it," says Mathiason.

Another assumption by workers is that those companies that do dissuade workers from swapping salary secrets do so to keep them in the dark and, as a result, keep salaries lower. But while that may be the case for some, Wharton professor Peter Cappelli says the primary reason managers suggest workers remain mum about pay is to avoid the headaches that come with it.

That's particularly the case if they're managing white-collar professionals whose work can be more difficult to objectively measure. "They know they are just going to get into these endless defensive battles," Cappelli says. "That's partly because their own performance management systems aren't that good, and partly because people don't want to believe they're not that good."

After all, even in the most gender-blind, bias-free organisation on the planet, it's not easy for employees to accurately compare their work to their peers'. Two well-established ideas in psychology show why. One idea, known as "illusory superiority" or the "Lake Wobegon effect," says that most people are overconfident in their own abilities and think they're better than average. As a result, they're disappointed if they find out they're making less than their peers, and don't necessarily get a boost if they find out they're making more.

A 2010 National Bureau of Economic Research paper, for instance, studied what happened when employees at the University of California were told about an online site listing other university employees' pay. The researchers found that workers with salaries below the median had lower job satisfaction after seeing the site, while those who earned more than the median saw no uptick in on-the-job happiness.

The other idea is something called equity theory, which says that people determine fairness by looking at what they put into a job and what they get out of it, and then comparing it to what their colleagues put in and how they are rewarded. That may be an easy comparison to make for workers on a production line or on a commissioned sales team. But it's much harder for corporate workers who stare at a computer screen all day.

"What seems on the surface to be a totally objective economic calculation is actually very subjective," says Ben Dattner, a New York-based organisational psychologist. "Are you surfing Facebook and I'm totally focused? Did you go to graduate school and I didn't? Did you have a brilliant money saving idea your co-worker doesn't know about?"

There is one environment, however, where the president's executive order might make an impact, says Wharton's Cappelli. In organisations that have a culture of fear - where people are motivated to do things out of fear of losing their jobs, getting punished or suffering other consequences - it could prompt people to be more willing to share what they make. But "if you've got an organisation where people are not talking about comparative pay now," he says, "they're not really going to change their behaviour."

- Washington Post

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