Salary Transparency: Good for Business or Bad for Morale?

Although there are typically no specific rules preventing employees from discussing their salaries with coworkers, conventional wisdom has traditionally discouraged such conversations as they can lead to conflict and resentment.

A new report from Self Financial found that the majority of employees – about 83% – believe the salaries of all employees should be transparent, and nearly three-quarters of those surveyed said they have openly talked about pay with their colleagues. This transparency has not necessarily led to positive feelings about pay, the report found. About 66% of employees said they felt underpaid after finding out how their salary compared with coworkers, and 63% said they were tempted to quit after finding out they were being underpaid. 

However, these feelings of frustration may be unfounded, as 61% of respondents to the survey said they have lied to co-workers about how much they earn. Younger workers – those between ages 18 and 26 – were the most likely to have been dishonest with co-workers about their salary, the report said. Younger workers also were the most likely to support disclosing salaries to colleagues, while Baby Boomers were the least supportive of this idea. 

In addition, those earning $150,000 or more per year were most likely to lie about their salary. In fact, once employees earn $50,000, their level of honesty about salary decreases, according to the survey data.

Legislators have taken up the issue of salary transparency as a tool to combat pay inequity during the past couple of years. Still, less than half of employees (48.2%) believed that their place of work has a fully transparent policy around salary, and more than 1 in 10 see no accountability at all around pay disclosure from their employer. However, 38.8% did feel there was some transparency, which may indicate a slow shift is happening, the report said.

Salary transparency is particularly important to job seekers, according to the report. Around 85% of respondents said they researched the average salary for similar roles to the one they were applying for. 

Job seekers are increasingly turning to social media as a source of salary information. Half of those surveyed said they use Instagram and TikTok to find out how much people earn in similar roles, and some use artificial intelligence tools, such as ChatGPT, to discover salary information, the report found.