Coworker vs. Class Envy

Almost half of all workers in the U.S. “are either contractually forbidden or strongly discouraged from discussing their pay with their colleagues.” … Researchers … found that employees who know what their peers make—especially if their salaries are below median earnings—were more dissatisfied with their jobs than their peers who knew nothing. (more)

Imagine a national law banning citizens from talking about each other’s income. Similar to the way firm rules against discussing coworker incomes raise job satisfaction, a law against discussing citizen incomes would also probably make people more satisfied. Yet I predict that if such a law were actually passed, a huge public outcry would spell political disaster for supporting politicians. People would wail about the horrors of totalitarianism and suppressing class consciousness, and call for revolution if needed to repeal it.

Yet most who work at firms with no-salary-talk rules are probably ok with it. Few refuse to apply for jobs at such firms, or even demand substantially higher salaries to work there. In fact, there’s a decent case to make that people are on average willing to accept lower salaries to work at such firms. After all, if not such policies would cost firms more in salaries, with few obvious compensating benefits.

This example highlights how differently we act in workplaces vs. national political forums. When talking national politics we refuse to compromise on key ideals that we hardly care about in workplaces. Voting is indeed a far fest, while we submit hyper-farmer style to domination at work.

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  • Wonks Anonymous

    You work with enough libertarians to have heard about the difference between firms and governments. Firms are based on voluntary opt-in. They are hierarchical (shareholders may vote for boardmembers, but employees are not analogous to democratic citizens) with orders going from the top down. There are all sorts of things employees aren’t supposed to talk about (ranging from workplace harassment laws to non-disclosure agreements). There are lots of things I’d put up with from my employer but get steamed if the government thought it had the authority to demand of me.

    • http://cephalicfurrow.wordpress.com PeterW

      “There are lots of things I’d put up with from my employer but get steamed if the government thought it had the authority to demand of me.”

      That’s because there’s more competition among firms for employees than among governments for citizens. The standards are different for tactical reasons – it’s a strategy to reduce the bargaining power of governments down to a firm-like level. That doesn’t mean that your preferences about the final outcome should necessarily be that different.

      • sociopath

        Isn’t daring do imagine governments competing for citizens “scientifically” called sociopathy in your every current society to discourage deviations?

  • http://theslittyeye.wordpress.com theslittyeye

    Firm management is authoritarian and employees are willing to be under the rule of the employer as they see as a compromise for getting income in return? However, I think the delicate difference between a workplace and a government is that employees tend to think that they have the “freedom”, that is the possibility of choosing other jobs over the current one, in the workplace, the level of tolerance towards the restriction in the workplace is related to the level of the income (to the livelihood of that particular employee). Whereas people see government as an eternal societal machine that you could never get rid out, thus the level of tolerance to restrictions is real touch people’s nerves, especially in a democratic country where people were told to believe that they are the one who should decide for the government, rather the other way around.

  • http://www.bayesianinvestor.com Peter McCluskey

    The National Labor Relations Act reportedly forbids companies from enforcing those rules. I suspect that any attempt to formally enforce such a rule would generate many complaints even if it were legal. I think most people prefer informal agreements not to discuss the subject.

    • lemmy caution

      right.

      http://www.hreonline.com/HRE/story.jsp?storyId=533336085

      The National Labor Relations Board has held that conversations about terms and conditions of employment, specifically wages and other forms of compensation, are for the purpose of employees’ mutual aid and protection. See Wilson Trophy Co., 307 N.L.R.B. 509 (1992), enfd., 989 F.2d 1502 (8th Cir. 1993) (finding that a nonunion employee’s conversations concerning wages to be concerted activity for mutual aid and protection); Jeannette Corp., 217 N.L.R.B. 653, (1975), enfd., 532 F.2d 916 (3d Cir. 1976). Section 8(a)(1) of the NLRA prohibits employees from interfering with, restraining or coercing employees with regard to the exercise of their Section 7 rights. 29 U.S.C. § 158(a)(1).

  • http://theviewfromhell.blogspot.com Sister Y

    We may talk about obesity on the internet or with similar-weight friends, but not among mixed-weight friends/co-workers.

    That generally extends to most unequally distributed resources that we care a great deal about – looks, money, intelligence, etc. may be vaguely alluded to, but must not be discussed such that coworkers or close associates are forced to become aware of differences. That is “impolite.”

    Does this go along with your thinking on why we don’t discuss ovulation-related fertility cues?

    • http://www.uweb.ucsb.edu/~criedel/ Jess Riedel

      Right. So really the smart question isn’t “why do we accept rules from our employer within the workplace that we wouldn’t accept from the government outside the workplace”, it’s “why do we (often) allow explicit rules in the workplace while preferring the same behavior to be regulated by vague social norms outside the workplace?”. Near/far distinctions may be at play, but it could also simply be what turns out to be the most efficient, or simply a historical accident.

      How about this reverse situation: when we owe money to corporations they can only weak legal tools to get their money, but the government can put us in jail for tax evasion. This distinction between government and corporate interactions seems similar in magnitude (and reversed) from the salary gag orders, but doesn’t suggest a near/far explanation.

      • Buck Farmer

        I’d say it isn’t a norms vs. rules issue, but instead one of degree of personal autonomy.

        In the workplace all of those implicit norms used outside the workplace still apply…in my experience those norms are stronger in the workplace even without explicit support.

        As an example, there is much less freedom of association within an office…you need to be able to work with almost anyone. As a result eccentric interests or social quirks that might survive in an environment where like-minded people can sort themselves must be suppressed for the smooth functioning of inter-employee relations. There is no official policy regarding this except that you are vaguely judged by your ability to “be a team player.”

        The contrast is between vague and poorly enforced norms outside the workplace and vague but strictly enforced norms as well as explicit rules within the workplace.

  • manooh

    Norway has a different approach to this: assets, income, and paid taxes of virtually everyone who is earning money in the country is published for everybody to view (since 2001 online). Here, for example, is the data for Norway’s current prime minister:

    Does that mean that people working in Norway – assuming that most of them check their co-workers’ data every once in a while – are generally more dissatisfied with their jobs? Then again, the Norwegian culture of “same for everyone” (with all its benefits and drawbacks), might be the differentiating factor here.

  • Miguel Madeira

    Perhaps it is simply status quo bias?

  • Buck Farmer

    While I would not quit a job over pay disclosure in isolation, but I would quit a job over pay disclosure as part of a package of similarly oriented infantilizing, paternalistic, and anti-autonomy measures particularly if paired with a support culture of strong autonomy-limiting norms.

    Since I believe that lack of pay disclosure restrictions is a strong signal of other desirable workplace policies and cultural norms, I would be willing to accept lower pay for a job with transparent pay (assuming these are the only two pieces of information I have to go on).

    And to put my money where my mouth is, this is in fact a goal I am actively working towards and hope to accomplish in the next 6 months.

  • Psychohistorian

    It is completely unthinkable that this phenomenon be explained by the fact that the US constitution unequivocally forbids the government from prohibiting people from discussing their income. Nope, couldn’t be a simple practical explanation when a complex, non-falsifiable one will do just fine.

    It also couldn’t have something to do with the differences between wanting to prevent status competitions amongst coworkers versus allowing status competitions amongst the general population.

  • http://liveatthewitchtrials.blogspot.com/ iamreddave

    In this interview Brian Eno puts himself in the forager camp
    “Describing his philosophy of studio work, Mr. Eno tries out another big metaphor: cowboys versus farmers. Most of what happens in a recording studio is repetitive monotony, tilling the same soil over and over to make slight improvements — insufferably boring, in his view. Mr. Eno prefers to see himself as a cowboy — or, even better, a prospector — constantly seeking out new territory, never staying in the same place for long.”
    http://www.nytimes.com/2011/07/05/arts/music/brian-eno-and-rick-holland-release-drum-between-the-bells.html?_r=2&scp=2&sq=brian%20eno&st=cse

  • http://daedalus2u.blogspot.com/ daedalus2u

    I think what is a more interesting question is why do companies prohibit or try to prohibit employees from talking about compensation? Presumably it is to weaken the information the employees have regarding the compensation policies of the company. It is to create a asymmetry of information as to wages.

    In general the employees know which employees are most productive. If they knew which employees were paid the most, they would know what it is that companies actually pay the most for, and it likely wouldn’t be productivity. I suspect that in the companies that try to keep such information secret the most, the managers who are determining compensation levels are compensating personal loyalty to them, rather than loyalty and productivity to the company.

    A whistle blower who discloses theft by the managers usually is not rewarded by the shareholders and they often have difficulty finding other work. Managers don’t want honest employees, they want employees that are personally loyal to them and them only.

    • Khoth

      I think the loyalty explanation is overcomplicated. More likely they just don’t want you to be able to look at the salary of a similarly-skilled coworker and know how much of a pay rise you can demand.

      • Khoth

        Oh, and some anecodotal evidence: When I quit my last job, I was offered a 15% pay rise to stay. That doesn’t make sense with the “paying for loyalty” explanation, but does with the “paying as little as they can get away with” explanation.

    • http://entitledtoanopinion.wordpress.com TGGP

      Mungowitz tried to argue with Robert Frank on underpaid productivity stars within workplaces here.

      We don’t really know the extent to which employers would prohibit discussion, because as mentioned they are legally restricted in that regard.

  • IVV

    “Yet most who work at firms with no-salary-talk rules are probably ok with it.”

    Perhaps it’s really they’re unsure they can find work at a firm without these rules? Or, to be honest, with the systematic, objective disclosure necessary to make this worthwile? Just because I’m free to discuss my salary doesn’t make it a good idea if I can’t corroborate my conversations with others.

    • Dan Weber

      People might also imagine they’re on the high end of the curve, and wouldn’t be if the information were public.

  • Dirk

    For a long time I’ve been pushing for making all tax returns public.

    People shouldn’t just be able to know how much their co-workers make. They should know how much their neighbors, distant cousins, former classmates, and anyone else in the USA makes. A transparent society!