Why firms need to stay silent about workers' salaries

A new study says companies that keep employees in the dark about how much their co-workers earn are making the right move. Here’s why.

According to the study, by researchers at the University of California at Berkeley and Princeton University, making workers’ salaries public wreaks havoc on a employee morale.

Here’s a bit of background: Thanks to the passage of California law where state workers’ wages could be published, faculty and staff of the University of California had their salaries published on a public website.

Researchers of the study contacted random U of C employees and let them know about the salary info being published on the Web. Days later, they followed up and surveyed those workers on:

• how they used the website
• their satisfaction with their job, and
• if they had job-hunting intentions.

What they found: 80% of those employees looked up salary details on co-workers in their department.  When an employee’s pay was below the median for his or her department, job satisfaction dropped greatly — and the likelihood of the worker looking for a new job skyrocketed.

As for the workers who were making more than their colleagues — there wasn’t much of a change in job satisfaction.