Tuesday, April 28, 2009

Should Your Coworkers Know How Much You Make?

For the last few weeks I have been tracking Harvard Business Publications' group blog. The item that caught my attention was a reflective piece raising an obvious question: In the aftermath of a global financial meltdown what part, if any, did business schools play in the cause? Navel Gazing at Hahvard was inspired by the question and links to an outstanding (if dry) lecture explaining in tedious detail the form and growth of what have come to be called "toxic" or "illiquid" assets. "The Economics of Structured Finance" is not for the feint of heart but is an air-tight hour of information. Yes, I sat through it, and no, it didn't make me feel any better. In fact, I came to realize that the magnitude of the problem is far greater than sub-prime real estate mortgages. It seems all kinds of credit obligations from credit card debts to jumbo business transactions seem to have been sliced and repackaged in the same chain-letter manner. Even if the practices (derivatives, CDO's, etc.) were to stop at once (and I haven't read anything insuring that they have) the consequences would take decades to unwind.

But that is not what this post is about.

A different writer, Tammy Erickson, posed the question repeated as this post title, Should Your Coworkers Know How Much You Make? and spun out some provocative ideas aimed at getting readers to think before answering. She ended with questions inviting comments from readers.

What do you think? How transparent are compensation levels in your organization? How would you feel about knowing what everyone else makes? Would you want to set your own compensation? I'd love to hear your views.

Her essay was apparently meant for a sophisticated peer group which didn't include me. The content of the extended question as well as the comments thread seem to be the work of a highly-compensated group of people with little or no experience in the plebeian world of hourly workers.

Being a natural born blabbermouth I had to leave a comment intended to poke a little life into the ivory tower, so I popped off a comment before the post was twelve hours old. You can find all this at the link. As is my habit, I returned to the site from time to time to see how my comment was faring in that crowd. One day passed. Then another. When it had not appeared two days later I decided my comment had not passed moderation. I wanted to try again, but yesterday, forty-eight hours after the post was published, my comment appeared.... in sequence as second in the thread. But by then it was too late. Comments threads are like the dead letter office of the Web. Occasionally someone will take time to plow through then, but comment threads are are as stale as last week's popcorn still sitting on the table.

I still have no opinion about whether workers should know each others' wages, but my instinct is that they should. One of the commenters was clearly chaffing at the notion that as a newcomer with more impressive academic credentials he thought he was being paid less that someone who had been around a long time and didn't have as many classrooom notches on his belt. I could talk all day about that kind of ignorance, but I don't have the time or energy. I only wish my comment had been up thread for him to have read before posting what he did.

Perhaps the blogmistress smelled an ulterior motive in my comment that she didn't want to be distracting. After all, it was not exactly on topic. But in a larger sense it is. Not wishing my prose to be lost forever I am repeating it here for my two or three readers.

Did [my subordinates] need to know that I was paying more in taxes than they were earning? I don't really know.

What I do know is that there are vast numbers of hard-working people who have no idea that their bosses and executives above them have an annual cap on their Social Security contributions which sometimes kicks in soon enough every year for their earned income to increase just in time for summer vacations and fall shopping.

And what I know further is that there are a helluva lot more six- and seven-figure incomes now than there were twenty-five years ago, the gap between the extremes has become wider and continues to grow, and the only way the country will dig its way out of the current hole into which we have fallen is to do what was done in the past to repay the costs of the Depression and WWII: return to a truly progressive income tax.

No one wants to be heard speaking about "income redistribution" out loud, but that is what has happened during the last twenty-five or thirty years. With the top one percent of the population earning about a fifth of all income, it's time for a "correction." That's what the stock market people call it when a bull market has a blip. I don't know what they call it when a bubble bursts, but we're about to find out. And from what I read in the papers, a "wage correction" (see Lilly Ledbetter and your great line "you're wise to behave as though any inequities will eventually come to light") is long overdue.

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