The Science Of Pay Transparency

In many parts of the world, women are paid less than men. One solution might be total pay transparency. Can it fix the problem and are we ready to talk about how much we earn?

- Moya Sarner

There is a revolution stirring. It’s taking shape in offices, around dinner tables and in newspaper headlines: people are talking about how much they earn. Keeping a polite silence around money is such a long-standing cliché that for some, simply having these conversations cuts to the core of how we think of ourselves and our society. On 5 March 2018, almost 250 staff of the BBC signed an open letter to director general Tony Hall, demanding “full pay transparency”. This followed a review of the broadcaster’s pay, which found that only one-third of the 96 best-paid employees were women, none of whom were in the top seven. Then in April 2018, large firms and public bodies were required to publish figures comparing men and women’s average pay, revealing that 78% of them pay men more. The BBC staff who signed the letter demanding pay transparency argue that it constitutes the “fastest, cheapest and fairest way to begin to tackle unequal pay”, and that it is the most effective way to uncover pay discrimination due to race, gender, age or class. The CEOs of those companies who have adopted the policy – so far low in number but high in enthusiasm – believe it is an improvement on the way we have always done things. But what is the evidence? Given we have laboured (quite literally) under pay secrecy for so long, what would such a dramatic shift do to our minds? Despite its longevity, there have been some experiments suggesting that pay secrecy may be the worst possible policy we could have in the workplace, for both employers and employees. In one study by Elena Belogolovsky at Cornell University and Peter Bamberger at Tel Aviv University, participants were divided into groups of four and asked to perform a task on a computer. After each round, one set of groups saw a bar chart on the screen showing only the amount they as an individual would be paid for their performance, and they were forbidden from discussin