This is an audio transcript of the Working It podcast episode: ‘Should you know how much your colleagues earn?’

Isabel Berwick
Hello, Working It listeners. Before we start today’s episode, we at the FT want to hear from you and we want to know what you’d like to hear more of. So to help us understand, we’re running a survey that you can find online at ft.com/workingitsurvey. That’s ft.com/workingitsurvey. There’s also a link in our shownotes. The survey takes around 10 minutes to complete and if you fill it out, you’ll have the chance to win a pair of Bose QuietComfort earbuds. So please don’t miss out. Now let’s get on with the show.

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Richard Milne
I remember before I moved to Norway, I was talking to a friend of mine who lived here and he started just looking at everybody in his block of flats and how much they earned. That has now changed since about 2014. You now leave a trail so I can still look up anybody’s salary I like, but they would get an email saying that I had looked at it.

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Isabel Berwick
Hello and welcome to Working It with me, Isabel Berwick. How would you feel if anyone could look up how much you earn? That’s what it’s like in Norway, where everyone’s pay details are accessible on a public ledger. The voice you just heard was Richard Milne. He’s the FT’s Nordic correspondent, and he’s been telling me how it works there. Because experts are saying that more and more countries are inching towards greater pay transparency, it’s usually a tool to address unfairness and inequity, such as gender pay gaps. But is there a right way to do pay transparency? The Norwegian scenario is at the radical end of the spectrum, because there is a spectrum and we’ll come to that in just a moment. First, though, back to Richard. As he mentions, in Norway these days, you can see who’s checking out your salary. But that wasn’t always the case.

Richard Milne
So this actually dates back all the way into the 19th century. In those days, you had to pull out a very big book. I’m not actually sure where you had to go, the library or the town office, but you could pull out an enormous book and check everybody’s salary. Fast forward into the 21st century, and this went online and for a period of about ten years, basically, you could look at anybody’s salary undetected. So there’s yeah, plenty of material for “Peeping Toms” if you want.

Isabel Berwick
So, Richard, do you live there? Among your friends and neighbours, is money a taboo subject or is it something that’s talked about?

Richard Milne
I don’t think people talk about salary as such, but I think what it does do is, obviously I work for the FT here, so it’s an international organisation. I don’t have too many colleagues, although in fact Robin Wigglesworth, the editor of FT Alphaville, lives not too far away from me. I should probably check up his salary. The FT isn’t so good at revealing our salaries to each other. But my serious point, in Norway, because this has been around so long, there isn’t really the need almost to check on your colleagues’ salaries because most Norwegians are part of collective bargaining agreements as well. There’s a very narrow band of pay that often goes in, and this pay transparency is also thought to be one of the reasons why Norway has a somewhat lower gender pay gap than other countries, but obviously it still has a pretty sizeable pay gap. So it’s not a panacea.

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Isabel Berwick
So pay transparency may not be a panacea for wage inequities, but that hasn’t stopped moves towards more transparency elsewhere in the world. As I mentioned, it can come in many forms. So to discuss some of the latest developments globally, I brought together the FT’s US labour and equality correspondent and friend of the podcast, Taylor Nicole Rogers, and Professor Tomasz Obloj. He’s associate professor at the Kelley School of Business at Indiana University. And we talked to Tomasz because he’s conducted lots of research on the subject of pay.

So I’m gonna kick off with Taylor. I want you to tell us about a new law that was passed, I think at the end of last year in New York City, that requires employers to include a pay range in all job advertisements. Now, that sounds like a dream to me sitting here in London. Why was that implemented and how is it working out?

Taylor Nicole Rogers
The goal of this law, from my understanding, was to give jobseekers more information about what they should ask for in terms of compensation. There’s a concern that if you are a woman or a person of colour and you don’t have that network in your industry, that employers can take advantage of you and pay you less than your worth. So this law was designed to give people the information they needed to negotiate a salary. And over the past couple of months that we’ve had it, it’s had really mixed reviews. There are some pretty big loopholes in the law. Like, for instance, New York City is obviously a big headquarters for the finance industry. That’s an industry where people get the lion’s share of their compensation in bonuses, but the law doesn’t require bonuses to be reported. So some workers are saying it’s not helpful. Employers are saying it’s too much of a burden. It takes flexibility away from them. But I think it’s really too early to tell if a law like this can really help workers get a leg up in the job market.

Isabel Berwick
So I remember for the last few years there’s been a sort of underground salary sharing movement, often on spreadsheets. Is that still going or do you think this sort of salary transparency is going to overtake the spreadsheet sharing?

Taylor Nicole Rogers
This spreadsheet sharing is still going, and in many ways I think it’s probably more useful for workers than these types of job ranges. The most common complaint I’ve heard from workers is that the salary ranges can be posted to say this job could pay $40,000 to $400,000, which is a huge difference, right? And you have to try to figure out where you land within that range based on your experience and what you bring to the table. But the spreadsheet, a lot of the times, what people will say is, this is what the job is. This is the company, this is how many years of experience I have. This is the level of education that I have. These are the skills that I have. And that way you can find someone who is more comparable to you and figure out what you can get paid.

Isabel Berwick
Yeah. How do you think this is gonna play out? Do you think it’s gonna spread?

Taylor Nicole Rogers
My best prediction is that we’re going to see a lot more salary transparency laws. I think it’s something that’s really popular with workers and with voters, not so much with executives. But I don’t think that’s gonna stop these types of laws from spreading. But what I think is still up for debate is if this law can do what it was actually set out to do, which is to help people get more information about the job hunt and give them the tools they need to advocate to get fairer pay.

Isabel Berwick
Right. So it could be really helpful for workers from perhaps minority backgrounds or who are career changing, you know, people who haven’t got much of an idea of what goes on in a particular sector because they don’t know people.

Taylor Nicole Rogers
Absolutely. And it’s just helpful for the job search, too, right? Like I’ve spoken to several employers in New York who said that they actually received less applications after this law came out, but they were very happy with that because they were only getting people to apply for the role who would actually take the role. It takes out that awkward thing where you’re offering someone the job and they say, “oh, wait, I actually can’t take this job because my mortgage needs me to be making twice what you’re offering.”

Isabel Berwick
Yeah, that’s — you bring up an interesting point there because there’s a separate campaign going on in this country to stop employers asking you what your current salary is.

Taylor Nicole Rogers
I think in the US we’ve kind of come to the conclusion that we’re not going to do that anymore. That doesn’t mean it doesn’t happen, but we have a lot of laws saying that that is no longer OK. But like I said, people have mixed opinions on whether or not that’s actually helping workers.

Isabel Berwick
I wanted to bring in Tomasz Obloj here, because, Tomasz, you’ve conducted big academic studies on the effects of pay transparency. What did you find?

Tomasz Obloj
I think that there are a couple of results that are just very strong and have been consistently replicated in different contexts by different academics. One of the big results is that pay transparency does lead to a decrease in discriminatory pay gap, in particular the gender pay gap. So there, I think that there is unequivocal evidence that pay transparency works. Now, that said, what we mean by pay transparency actually refers to the wide range of policies and the salary history ban that was just evoked. The preliminary evidence is that it may actually not solve but rather exacerbate some of these problems, because what the salary ban and similar legislation does is that it somewhat forbids from asking about your prior salary. So it sets a lot more emphasis on the expectations. And then people from minority backgrounds tend to have stronger reservations about bumping up their expectations and voicing them. So there’s some mixed evidence there. But I think in terms of pay transparency, of access to information about what you and others earn, the biggest result is, is that it works in terms of making pay more fair.

Isabel Berwick
That’s interesting because I think a lot of leaders and managers are quite worried about pay transparency. You know, particularly among current staff. It can lead to, you know, discord in the office when people find out that newcomers are being paid more. Or is this not something that plays out in the long term?

Tomasz Obloj
So I think that you’re absolutely right. This is one of the big concerns. And to some extent, it is legitimate because just looking at the media attention or attention when any, any pay becomes transparent, we see this spike in web searches. We see people jumping on that information. And given that most of us think that we are above average, that leads to envy. That leads to social comparison, that leads to some, some unrest. But I would tend to believe that it’s relatively transient. So in a sense, it’s . . . It may just be a cost of pay transparency that we have to live with because of some of the strong beneficial forces that it also activates.

Isabel Berwick
So I spoke to the FT’s Nordic correspondent earlier, who lives in Norway, who says that pay transparency there hasn’t got rid of the gender pay gap, although I believe the gender pay gap’s pretty low in Norway anyway. Do you think long-term it’s a tool that we really need to help eradicate the gender pay gap?

Tomasz Obloj
So it’s true that it doesn’t eradicate it. What it does is it helps close it. There are, of course, in a sense these discriminatory practices are so deeply seated that it will take probably decades for it to completely, completely disappear. But I tend to think that it is a very efficient tool. So it’s not the only tool we have. All right, it is just a tool. So I’ve looked at the data for academics in North America, and we’ve also seen it close the gender pay gap by almost 50 per cent. But it didn’t close it to zero. So it’s still, it’s still unfortunately, there.

Isabel Berwick
Yeah, I feel like it’s gonna be with us for a long time. And I wanted to ask about some of the ways that employers try to get round paying people differently. I think I saw in your report that they’ll give people different job titles. So essentially a promotion just to sort of justify a pay gap. Is that something that’s gonna become more widespread, do you think?

Tomasz Obloj
So it may become widespread. Yes. And that’s, of course, the unintended consequence of this tool also, right? Because the idea is that the pay should be the same or similar for the same job. So what you can do, you can strategically manipulate the types of tasks that are included in the job description, the job description or job title itself. In a sense, any law or any rule can be manipulated and can be exploited, so this is not the only one. And unfortunately, yes, we will probably see a little bit more of that.

Isabel Berwick
I just wanted to bring in Taylor there. Have you seen any evidence of people getting round pay transparency?

Taylor Nicole Rogers
Absolutely. The law here is only for new job postings. So if the person is already there, then there’s no way for you to know what your existing colleagues are being paid. You only know what, roughly what the new person coming through the door is being paid. And a lot of hiring managers have tried to explain that away as saying, well, you have to know that we’re in a really tight labour market. There’s a shortage of workers, so we have to pay more right now, but we can’t pay you existing employee more. So there’s been a lot of things floating around as to how we’re going to figure that out. But long story short, yes, I think people are working really hard to figure out how to get around it.

Isabel Berwick
Yeah, I think it’s a work in progress, so I’m interested to hear how it’s going. Tomasz, how do you think it’s going to play out? Taylor thinks it’s gonna, you know, roll out across the States. Do you think this could become a global phenomenon?

Tomasz Obloj
Yes, I think so. Most definitely. And I think that what we will see in the future is, again, we’ll see somehow different countries, different states, different geographies. Somehow testing different forms of pay transparency, or the Nordic or the, the one in Norway that you evoked. That’s probably the most extreme form of transparency. And then we also see some countries taking baby steps where they will just disclose the salaries of the top five most paid employees of the organisation. Some organisations will disclose the algorithms or not the actual salaries, what, what determinants of salaries are, right? And so these are all different forms of pay transparency. So I think that what we will see is just different countries playing a little bit with those and seeing which ones actually work, right? And there’s a couple of metrics that we trace. We trace the gender pay gap, we trace mobility, we trace productivity. And so the question is, what is the optimal mix that somehow serves the purpose that we’re actually after?

Isabel Berwick
So essentially, we’re on a kind of global experiment.

Tomasz Obloj
I think so, Yes, I think, I really think so. Yes. And it’s actually, for a researcher, it’s yeah, it’s an El Dorado. But I think that it is a global experiment. Hopefully will just converge fast.

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Isabel Berwick
Does that mean we’re all going to end up like Norway, with neighbours checking up on how much we’re earning? Turns out, it’s a question that the FT’s Richard Milne, who we heard at the start of the show, gets asked a lot. So what does he say?

Richard Milne
I think the fundamental thing is Nordic societies are based on a few sort of key, almost fuzzy concepts in a way, but they’re very important and they are a quality that trust. And these are consensus societies, and I think those underpin everything on pay transparency is enormous levels of trust. You will see new mothers, new fathers leave their babies in their prams, outside cafés, outside restaurants, even outside shops sometimes. You’ll have tremendous faith in business, in government, in authorities. I think that’s something quite fundamental that’s very hard to emulate. So even if you take individual policies, in this case on pay transparency, you don’t have all these other fundamental issues and therefore it falls down. And I suppose on pay, one other thing that I think is very striking here, is this really what I call is a kind of pay compression. The people who are paid the most in the Nordic region and in Norway are paid a lot less than in the US and the UK. And the people who are paid the least are paid a lot more. And so you have much more equal step in a sense between being a nurse and being the head of the hospital or being a teacher and being the headmaster. You’re equal steps all the way up.

Isabel Berwick
Richard, why did they change the rules to let people know if anyone’s looking at their salary?

Richard Milne
I mentioned the words ‘Peeping Tom’. I think it was to take away this sort of purely voyeuristic tendency. The people that were just looking at everybody they knew or all their colleagues. So there still is transparency, but you know that you’re gonna alert somebody. Now, that may be fine. Maybe you’re looking at benchmarking your salary against other people in your industry, in your profession, at a rival, whatever. But it was to take that away. And I think authorities have said 90 per cent of the searches disappeared overnight. And so you’ve got a much more sort of serious use of the transparency.

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Isabel Berwick
I love pay transparency as a topic on this podcast because it’s got everything, it’s got immediacy. There are things happening right now in New York and across the States that are changing workplaces, but it’s also got a really timeless quality. You know, Richard was telling us about that very long-term view from Norway and Tomasz the academic is doing these massive studies around the world. So the short-term benefits and impacts are gonna be felt in workplaces. If you’re working somewhere and a colleague comes in on more money than you, you’re gonna be angry. And I think that’s going to lead to short-term change and perhaps ironing out some of the inequities we’ve seen in workplaces, but it’s not going to be comfortable. So that said, I’m not gonna tell you how much I earn.

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Thanks to Richard Milne, Tomasz Obloj, and Taylor Nicole Rogers for this episode. If you’re enjoying the podcast, we’d really appreciate it if you left us a rating and review on Apple Podcasts. And please do get in touch with us. We want to hear from you. We’re at workingit@ft.com or I’m Isabel Berwick on LinkedIn. If you’re an FT subscriber, please sign up for our Working It newsletter. We’ve got behind-the-scenes extras from the podcast and exclusive stories you won’t see anywhere else. Sign up at ft.com/newsletters. This episode of Working It was produced by Manuela Saragosa and Persis Love, with mix from Breen Turner. And before I go, a quick note: Working It’s taking a short break. We’ll be back in the spring, so please stay subscribed for a new season of episodes. Thanks for listening.

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