This week’s Loose Change comes from Boost My Budget, a blog all about making money online, saving money and getting to grips with personal finances.
Do you know what your friends earn?
The chances are you don’t: a survey found that Brits are seven times more likely to discuss their sex lives than their salary.
But should we be more open about our pay cheques? Many private companies are against it, but there are arguments that you could earn more as a result.
Time to open up?
For me, the main argument for salary transparency is that it could lead to more equal pay. In the private sector, many people are paid wildly different amounts from colleagues in the same job. It’s no surprise that women usually come off worse in this situation, earning on average 18% less than men.
There are all sorts of reasons why two co-workers might have different salaries. But whatever the reason, knowledge is power. If you know for a fact you’re underpaid, you can act on it – whether that means asking for a raise, improving your performance or looking for a new job.
Conversely, if you know that you are in fact fairly paid, you’re more likely to feel valued by your company and get on with your job without comparing yourself to co-workers.
A key weapon when job hunting
The last time I looked for a job online, only about 1 in 10 listings in my industry gave a salary along with the job description. In most cases, I was asked to state my expected salary in my application. When people don’t talk about their salaries, it can be really difficult to know what to ask for.
If you lowball yourself, you could be unknowingly missing out on £1,000s per year. But pitch too high and you could be out of the running altogether.
Another argument for knowing what other people earn within your organisation is to help you make decisions about your career development. If you know what the people above you are earning, it can help you decide if you have a future in that company. If you know that the company’s salaries don’t match up to your personal goals, it may be time to move on.
All of the above explain the popularity of websites like Glassdoor, where users share their salaries anonymously online. So people are actually willing to talk about what they earn – just not to their friends!
Reasons not to share
So, knowing what your colleagues make could help you earn what you’re worth and defeat pay inequality. But are there good reasons not to talk about your salary?
Well, for a start, knowing what other people earn won’t necessarily make you happier. In fact, the reverse could be true: it will probably make you less happy if you know you’re paid less than other people.
If you currently earn enough to support your lifestyle, you’re probably content with the way things are. But if tomorrow you find out your colleague makes £5,000 more than you for the same job, you’ll suddenly feel underpaid and resentful – even if your salary seemed perfectly fine just before.
And of course, there may be good reasons why that colleague is paid more. Perhaps your well-paid coworker has more qualifications or experience than you. Maybe she’s quite simply better at her job. There could be other unique circumstances that led to negotiating that salary with the company. Whatever the reason, your boss may feel that the difference in salary was a reasonable business decision, and they don’t necessarily owe you an explanation.
It can be difficult for private companies to ensure pay equality. It’s one thing to offer the same base salary to all new graduates, for example, but what about higher level hires? When people switch jobs and come from a variety of industries and backgrounds, they will have different salary expectations.
Companies need to do what it takes to hire and keep the best staff, even if that means paying some people more than others.
If you know you’ve come off with a worse deal, you’ll likely feel demotivated and undervalued. That’s not good for you, and not good for your company.
What’s the verdict?
Overall, I think it would be beneficial to talk more about our salaries. More openness about pay could help us know our worth and ask for what we deserve – and if it could end up re-addressing the gender pay gap, so much the better.
But of course, being British, I’m not going to be the first to volunteer my salary. I’ll stick to searching Glassdoor for now!