The case against paying everyone an equal salary.
By Amir Yasin (Software Engineer and Tech Enthusiast)
This post originally appeared on Medium.
Equal pay for equal work. It sounds like a pretty simple and, frankly, attractive concept. In a country where, on average, women make 78 cents (or less if you account for race) for every dollar a man makes why would any fair minded person not support equal pay? It’s a no brainer, right? Well, maybe.
Sometimes Good is Good Enough
If you’re a cashier, if you’re a waitperson, if you’re a law enforcement officer, if you’re an aircraft pilot, or a multitude of other professions this makes complete sense. You absolutely deserve, and should demand equal pay. Why? For two reasons:
- First because you do the same thing as the person of a different race or gender that you work with.
- Second, and perhaps more importantly, the difference between (just to pick a random example) a good machinist and a great machinist comes down to about 1.2x better results for the machine shop.
It‘s not really a huge difference. If you’re a good male machinist you certainly shouldn’t make more than a good female machinist. I would additionally argue that if you’re a great male machinist, you’re probably still worth about the same as a good female machinist and should be paid about the same. Being good in this case is good enough.
Sometimes Being Great Matters a Lot
Sometimes, it’s not 1.2x, but a lot more. To take another example, the difference between a good teacher and a great teacher is the difference between just learning the material and having a life altering experience.
Since this article is about pay in tech, let’s examine that. What’s the value of a good developer vs a great developer to the organization? There’s a reasonable body of research that demonstrates a huge jump from being mediocre to being good and from being good to being great in terms of productivity and ultimately value to the company. You can call this 10x, 20x, 100x, it doesn’t really matter. The point is it’s a big jump. Even without the study, almost everyone agrees with this just based on anecdotal evidence. Anyone who’s worked for any amount of time in a reasonable sized team knows that there are large variations in skill between the top and bottom of the “senior developers” in the group. If you’ve been there you’ve probably also seen these differences have a massive impact in the value that developer provides to the organization.
Not on Gender or Race, but Skill
Just in case it wasn’t obvious, this is about skill and value not about gender or race. A Latina is just as likely to be your 100x developer as a white male. Skill should determine what you make as an engineer in tech.
To its credit Google recognized this and in a podcast said they do pay engineers that perform near the top at an exponentially high level than those that perform acceptably.
Unfortunately to its discredit Google not only failed to remove the gender bias in pay, but basically retaliated against someone who was trying to figure out if one existed.
The general view from this incident has been that pay bands should be equalized to eliminate this inherent bias. I disagree.
Turn on the Lights
Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman. — Louis D. Brandeis
Bias really wins when it’s unchallenged. It can’t be challenged while it’s hidden in a cloak of secrecy. A cloak, by the way, that only serves the powerful and actively works to the detriment of those with less power.
What I propose is going to sound a bit radical to some (in the west at least, it’s not at all uncommon in the east), but has been successfully implemented by some companies in the US, and hopefully will become standard practice (though this admittedly may be a long way off).
Make All Salary Data Available to Everyone in the Company
I know, it’s crazy, but hear me out. Making salary data available to everyone, along with the criteria on which the salary decision was based creates a level playing ground. I’ll call this open salary (it may already have a name, if so let me know and I’ll start calling it that). If you make $1,000/year less than another person on your team, you can see what criteria you need to improve to get a bump. If you make $10,000/year less but meet most or all of the reasons the higher paid person makes more, you can get your salary adjusted to more accurately reflect your value.
It’s worth mentioning that being smart and skilled at something that doesn’t materially affect your job is not necessarily a reason to get paid more. Let’s imagine Bob received an undergraduate degree in computer science, then went to medical school and survived a neurosurgery residency. Let’s further imagine that Bob got a job at a hospital in the surgery department. In this case, Bob’s skills and education as a neurosurgeon materially affect his position. Let’s imagine instead that Bob decided that he’d rather not have the stress of being a neurosurgeon and instead applied to a company as an engineer. In this case, Bob’s skills and education as a computer scientist may be considered but all of his skills and education as a neurosurgeon will be eliminated or severely discounted. Why? Because they have no bearing on the engineering job. Bob should not expect to get a salary in the neighborhood of $700,000 for the engineering position because “that’s what your skills demand."
Let's Talk About It
In most of my blog posts, I tell you guys what I think. I might chat with people on twitter, but here on Medium, other than the occasional reply with a private note, I’m pretty silent. I’d like to do this one a little differently. Having daughters myself, I care deeply about this issue. To that end I’d love to have a discussion on Medium. If you respond, it’s civil, and adds to the conversation I’ll recommend it so it shows up below (for at least several days after this post is published). If you’d prefer to discuss it via twitter please use the hashtag #OpenSalary so we can all participate.
I’m going to address some possible objections to open salaries below. Feel free, of course, to respond with your own objections. I’m happy to try to address those as well.
Any Company That Does This Will Be Destroyed
Whole Foods does something very similar to this. Last I checked they’re still open and doing quite well. With a gross profit margin of 35.6 percent (Q2 2015), they exceed those of chains like Kroger by nearly 15 percent. Is this solely because of sharing salary data? Of course not, but employees that can verify that they’re being paid commensurate with their skill are probably happier. Happier employees make a better company.
People Will Be Upset
Initially this may be true. Some people have been taken advantage of and they will be upset. If you’re in management, that’s your fault. You created the situation, allowing it to fester isn’t the answer. That said, you can mitigate the risk by adjusting salaries to a fair level a few months before opening them up.
Someone Will Publish These Salaries Online
This is a legitimate concern. It gives even more power to your next employer if they conceal salaries. To mitigate this, I would suggest having a book that anyone can come see (Whole Foods does this I believe), but that is not online so no one can just download and leak it.
Management Will Not Agree to It
Force their hand. Start talking openly about salaries. It is illegal for your employer to retaliate against you for discussing your salary with other people (at least in the US). Create your own book, go to management and get salaries adjusted so they work. Coal workers didn’t just get safer working conditions. In the same way, companies aren’t just going to give up their significant advantage in negotiations. We’re going to have to make the situation better by working towards that goal.
What if Other Companies Still Find out What I Get Paid?
Here’s a dirty little secret: They can mostly find out anyway. You’re the only person in the dark here. Unless you’re moving across the country from a very small company chances are that the people hiring you have a reasonable shot at getting a fairly good idea on your current comp. Companies have worked together against your interests in the past. They got caught. They’ll get better and they’ll do it again. It’s just human nature. The only real answer to it is to spread knowledge around and let people make informed decisions.
People Will Treat Me Differently If They Know How Much I Get Paid
Good. You can quickly find out who to eliminate from your life. What you make is not a statement about your worth as a human being. It’s a statement of your work’s value to a company. If your compensation to value ratio is reasonable, then you shouldn’t be worried. In any case, it’s not just about you necessarily. It’s about ensuring that everyone has a chance to understand what their value to the organization is and make sure that they are properly compensated for that value. Besides that, you have no way to know if you have a high or low salary. You may find that you’re the one asking for an adjustment.
We Should Just Unionize
This just won’t work. As I’ve already stated, equal pay isn’t the goal. The goal is pay based on the value you bring to an organization. There is also no way to enforce this union (you can’t make employers sign up for it, and there will always be people willing to work outside of it).
Even if you were to overcome these barriers, the evidence for the efficacy of unions in fields where skill makes a big difference is not good. Take a look at teachers unions. Not only do they fail to ensure that the very best teachers get paid commensurate to their impact, but they actually work to ensure bad teachers stay in the system. In this, they work more for the mediocre than the great.
About the guest blogger: Amir Yasin is the CTO and Co-founder of a startup currently under development. As a developer who’s done everything from real-time embedded software to web development, he's deeply interested in high performance, scalability, software architecture and generally solving hard problems. Follow him on Twitter at @ayasin.