The problem is - historically it hasn't bitten companies badly enough that they stop doing it.
On aggregate, you can get away with massively underpaying your top talent and overpaying new hires - most of which aren't good and will go to other companies before they're even moderately productive.
I question why they're so obsessed with hiring so many new people to do basically nothing. That's the reason they have to over pay for them: The sheer amount that they're trying to hire.
Perhaps it's inevitable that you have to hire 100 people to find 5 or so people that'll be good and stick around for a while that you can underpay in the future.
> The problem is - historically it hasn't bitten companies badly enough that they stop doing it.
The reason for that is the culture around keeping compensation secret. Most people (in the US at least) believe it's impolite to talk about salary directly. I do wonder how much of this taboo has been cultivated by corporations that benefit from workers feeling like they shouldn't talk about salary.
On top of that, some companies tell their employees they are not allowed to talk about salary. That practice is illegal, but some companies still do it.
You have the right to do it, but your coworkers might become bitter and envious if you make more than them. You have to judge how mature your coworkers are and whether it would cause trouble for you if they made a complaint to your manager. For example, if you are on a team of like 5 people, it could be impossible for them to maintain your anonymity as they say "Why am I making less than others?" You might also imagine that if your coworkers don't get the raise, they will not be as motivated to work, and may cause problems for you that way.
I've been on both ends of this, usually the lower end, and I can say first hand it is hard to not take getting paid less as a personal affront to your dignity. And every time I was underpaid I not only didn't get a big raise, but I took much longer than expected to find another job. If you are underpaid, your best option is to leave in most cases. Don't underestimate how long you have to tolerate the low pay while you try to leave.
That's all true. I've usually asked co-workers I'm friends with, and believe we can both be mature enough, if they want to exchange pay info. I've also told a few people what my salary was when I'm leaving a company, and tell them to share it freely.
Everything you say is true though, it can cause a lot of drama if people start having hard feeling over pay. This is why companies sometimes tell people not to share their salary, or even put it in the company handbook, etc, and I'll say again: it is illegal for a company to tell or even suggest that you not to share you salary.
> And every time I was underpaid I not only didn't get a big raise, but I took much longer than expected to find another job.
How are the two related? Why does being paid less cause you to take longer to find a new job?
>How are the two related? Why does being paid less cause you to take longer to find a new job?
Being paid less didn't actually make me take longer to find another job. But I looked for other jobs to get more money. My point is, simply knowing you are paid less/unfairly is not a silver bullet. Most companies will refuse to give raises on demand, on principle. You most likely can't just get a new job right off either or you would have just done it. So you'll be stuck for months or even years knowing how much less you make than your coworkers. Nobody thinks they'll mind knowing the truth, because they underestimate their own ego and how difficult it is to get more money.
Most businesses would rather pay someone new and unproven significantly more than you're asking rather than give you, say, a random 10% raise. It kinda makes sense, because there's no limit to what you can ask for. Most non-tech people seem to resent how much more we make as well. So for various reasons, they don't want to pay you more and/or don't believe you are worth more, and you have to prove it to them by leaving.
Isn't it good to know how underpaid you actually are relative to your coworkers? If your colleagues are being paid less than you are for the same work, shouldn't they direct their ire at the company rather than you?
I am 99% convinced that pay secrecy primarily benefits employers and management at the expense of most employees. It creates an asymmetric information environment that makes it difficult for employees to negotiate raises or even to be paid market wages.
The 1% uncertainty is that government jobs (which have pay transparency) tend to be underpaid, and the rare (?) private workplaces with pay transparency don't seem to have done much better than their pay-secret counterparts, with the exception of law firms, where the associate/partner model seems to have caught on. Union negotiated rates seem to have up and down sides.
Of course, you should really consider how much money the company is making, where it is coming from, and how it is being spent. In my experience, (non-founder) technical staff members are often paid very poorly compared to the money that they bring into the company, even after considering large amounts of overhead, expenses, benefits, taxes, etc.
>Isn't it good to know how underpaid you actually are relative to your coworkers? If your colleagues are being paid less than you are for the same work, shouldn't they direct their ire at the company rather than you?
You would think that, but imagine you are making less than someone who does less work than you, or is clearly less skilled. Although you might initially blame the company, you may grow to resent your coworker who is getting more for less. Especially if it's a lot more. You can't really start making more demands of them because they make more, or else slack off because you make less.
I think there are situations where secrecy can be good and others where it can be bad. When salaries are public and negotiated by groups, that can lead to other worst-case scenarios. Your company can always decline to pay you more by coming up with a delusionally low pay scale, while claiming the high ground of fairness or some shit. When people can negotiate for more, they can potentially raise the bar gradually. And with the legal protection behind salary disclosure, and websites that make it easy to share your salary, I think it's better to let salaries fluctuate with the market. It might be nigh impossible to demand a raise without switching jobs, but at least the current norm lets employers effectively bid on you.
Yes I see what you mean now. Of course it would be important to know that sooner rather than later. But I suspect if you are paid that little, you would know it from industry averages. But awareness of how screwed over you are is not going to make you happy. If you can be paid that much less than the next guy and not know it from industry averages, you should probably be able to guess it.
At one job where I was perhaps making 70% of what my coworkers did, and I found out a couple of years before I was able to leave. It did upset me a lot. I knew I was underpaid before that because of how other companies paid, but knowing specifics definitely rubbed salt in the wound. I suppose knowing specifics might be a necessary evil but I think back then it might have been better to not know. On the other hand, that experience set me down a path that eventually worked out ok, so I can't really say I wish I didn't know.
> I do wonder how much of this taboo has been cultivated by corporations that benefit from workers feeling like they shouldn't talk about salary.
I don't know if corporations originated the taboo, but they absolutely cultivate it so that they can retain the upper hand in salary negotiation, enabling them to pay below-market wages to everyone except for new hires with multiple offers.
There is an unfortunate cultural problem where people are morally valued by how much money they make. Pay is often very disconnected from economic benefit (consider the enormous economic value produced by underpaid teachers, or grad student researchers) and nothing to do with moral value.
> historically it hasn't bitten companies badly enough that they stop doing it.
Because VC money based around vague promises of selling data to advertisers have traditionally propped up even fundamentally unprofitable businesses so software quality hasn't significantly contributes to success or not. Now that we're out of ZIRP then companies might start learning that in 10 years or so after they've replaced a few generations of programmers, nobody knows how anything works, and suddenly software quality starts to actually matter to investors and consumers
> companies might start learning that in 10 years or so after they've replaced a few generations of programmers, nobody knows how anything works, and suddenly software quality starts to actually matter to investors and consumers
I suspect in software specifically, there will never be such a reckoning because compared to maintenance, replacement is too easy.
Actually quite a lot. You can check the glassdoor and then search the companies market cap over the years. One company I research recently, Philips seem to have this problem 15 years ago. Compounding effected today, it is just a very small insignificant company. Meanwhile it gave birth to titans like ASML.
Be better managers. Do more human work during the hiring selection process. Take HR away from the lawyers. Take Responsibility and Accountability for the management layers of the company (including the C-suite).
On aggregate, you can get away with massively underpaying your top talent and overpaying new hires - most of which aren't good and will go to other companies before they're even moderately productive.
I question why they're so obsessed with hiring so many new people to do basically nothing. That's the reason they have to over pay for them: The sheer amount that they're trying to hire.
Perhaps it's inevitable that you have to hire 100 people to find 5 or so people that'll be good and stick around for a while that you can underpay in the future.
I suspect there's got to be a better way.