Ask HN: Why don't people talk specifics about money and salaries?
Growing up neither my parents or friends of my parents talked about specifics around money. Not only how much everyone was paid, but also how much they paid for a car or a house.
When I went to negotiate my first salaried job I had no idea how much to aim for. Was $30,000 a reasonable salary? $60,000? I realized then that everyone's aversion to talking about money had left me in the dark as to how the business world worked.
Why is everyone so hesitant to share their salaries and other financial information?
Note: I know that it is against company policies, at many companies, to disclose your salary. Is there a reason besides this?
Edit: Has sharing financial information, either personal or about your company, ever caused you problems later? I would love to hear some good stories.
87 comments
[ 3.0 ms ] story [ 164 ms ] threadCompanies similarly worry about a hit to team cohesion that could result if team-members find out that some of them are paid much more than others.
That being said, I also think that a lot of people are stuck in a bit of a vicious circle. These same people know they don't have a lot of financial knowledge, but they also don't know who to ask or how to ask primarily because no one around them would talk about money or finances.
My kids will know how much their stuff costs, and they will earn their luxuries.
We feel that in the long run, this can only hurt us through negative morale, high turnover, and destructive office politics."
http://www.joelonsoftware.com/articles/fog0000000038.html
It really wasn't good for morale. A lot of time was wasted worrying about salaries rather than building products.
Another reason was that, even when only estimating spending, as a kid I tended to over-emphasize "conspicuous consumption" and gadgets: assumed the people with bigger TVs, new game consoles, better cars, etc. were wealthier. What I massively underestimated was the cost of "nice" vacations (esp. compared to relatively minor items like game consoles), so it was really the people who liked to travel a lot who spent more, but I never saw their spending happen when I was around.
edit: To add one more confound, I think I also put too much emphasis on "class" associations: I assumed parents working blue-collar jobs made less than white-collar, which was not always true, esp. when you took into account that some blue-collar families had 2x incomes.
I am very grateful to everyone who showed me, through their transparency, that it is possible to make a living through self publishing books and software, so I've made a commitment to share my own numbers.
But I'm wondering what problems this transparency has caused as well.
I can't say my experience speaks for everyone else, but I can't imagine why it'd ever be an issue disclosing these things openly.
I guess the legality of such a clause will depend on where you live, but for people who have something like that in their employment contract, the risk may seem significant enough that it isn't worth violating it.
What this means in practice is that they'll make up "performance" bullshit (unrealistic deadlines, retroactive shortfalls, responsibilities without the support necessary to achieve them) and fire that person over that instead. One of the reason for companies to have "low-performer" witch hunts (also known as stack-ranking) on a periodic basis is to flush out the "troublemakers" they dislike but can't legally fire.
So I don't know how much protection those laws actually provide, but it is technically true in the U.S. that no one can be fired for disclosing his own compensation.
It gives them the right to terminate employment because of a business event (plant closing, large-scale layoff for strategic reasons) without being liable for payment (as opposed to, e.g., a contract where there would be "kill fees" for early termination). It also gives them the right to fire people individually for criminal behavior, violations of well-understood professional ethics, and falling short of an objective, published performance standard. If the company policy requires 150 widgets per hour and one person's coming in at 130, the company can fire that person. That said, if he can establish that someone else (e.g. the boss's son) had the same title and job, produced 120, and wasn't fired, he has a stronger case.
White-collar firings, which are always dressed up to look like "performance"-related firings, are a major gray area. The reason for the kangaroo court of "performance improvement plans" is to make the case that, at the least, the employee was warned. PIPs don't show that the termination was fair, but establish that the employee "should have seen it coming", and that often decides these he-said/she-said sorts of things in the employer's favor.
Termination endgames can be played to a win. For one thing, a lot of the things that people get fired for can be actionable. Let's say you have a bad boss and try to get away from him using a transfer. In most companies, bosses fire people who try to get away from them. However, if company policy is to allow transfers and you can establish that someone of your rank and seniority was allowed transfer anywhere in the company, but your boss blocked it, you have a harassment claim. You used a legitimate HR measure (transfer) in a legitimate way. You can never prove it was the reason for the termination, but if you document everything you do-- every single thing that can make you look good-- it is to your advantage. (If he lets you transfer and get out of his way, that's better. Getting a better job is always better than playing the termination endgame.)
You're almost always better off getting another job, but if you have some reason to want to stay at the company, there's a lot you can do to make yourself hard to fire. Use all internal recourse you have, including HR. (Be respectful and focus on defending yourself and your reputation, not attacking your boss. HR is not your friend, but you can still use them.) That will make your boss angry, and HR will almost always side with management, but if you document everything you can make it look like the firing is retaliatory. Health problems are often protected, and everyone over 25 has at least one health problem. Disclose it, no matter how minor. (If you're presented with a PIP, sign absolutely nothing, leave the room, and disclose a health problem by email immediately.) If you get put on a PIP, dress up interviews as "doctor visits" and force your boss to change the schedule of the PIP (if he doesn't, then start using words like "emotional distress" and CC someone in HR.) This will exhaust him and draw out the process long enough for you to get a better job. The goal, I should mention, is usually not to sue the company. It's to scare them into either slowing down so you can get out, writing a severance, or agreeing to a good reference so you can move on in your career.
TL;DR: At-will employment is much more complicated than employers want people to believe. The problem is that the termination game is something people (if they're lucky) rarely or never have to play, and people who've been through it don't talk about it and share knowledge.
I think the more we talk about it, the more we have to gain. It only hurts bad employers.
But if it wasn't for a few friends sharing how much they charge for consulting I would never have known it was possible to charge $250/hr (and much more). I would have been stuck charging multiples of the hourly rates I had heard about (Maybe I would have doubled the highest hourly rate I had heard at the time, which was $20 an hour).
When my friends and I got jobs after going to college, we disclosed how much we were getting as far as offers go. Of course, we were going across the country, and the rates in Atlanta is not the same as New York or San Fran or Seattle. But we also had the same job during college, and knew how much each other made because of that (fixed pay scale for interns).
As a counter to this, my co-workers and I were buying a retirement gift for another co-worker. We had in mind what we were going to get, but on sudden impulse in the store we decided to upgrade the item. It was mentioned that what we had budgeted wouldn't cover the new item, and a co-worker said "it's OK, the boss [also part of this purchase] can handle it, he drives a Mercedes." It's comments like these that make it awkward to share salary information. Outward displays of wealth have no bearing on income, that's simply what they choose to spend their money (or debt) on.
It enables companies to pay employees as a whole much, much less.
Doesn't need much more explanation than that.
(I'm not saying there isn't such a motivation. Clearly something is at work here. I'm saying you're explaining the motivation of the wrong set of actors.)
If you publish your salaries, and along comes a super-talented programmer who asks for more than standard, but has unique talents that don't really fit on the standard "scale", then you can bring them on board, without creating resentment, etc.
I've worked at a company with standardized salaries, that lost out on hiring the best programmers, simply because their salary system (everybody's titles linked to salary grades everyone knew) was too inflexible.
Personally, I've shared my salary with like-minded coworkers willing to help each other negotiate the best terms. Never shared with most people, however, because they've internalized irrational ideological barriers to doing things like this.
So you're bringing somebody exceptional on who will create some amount of value, and you're willing to compensate them appropriately for that. But wait, the rest of your team will be resentful!
There are two possibilities here: 1) You're paying everyone else less than they're worth to you, in which case they should be resentful; or, 2) You're paying everyone else what you think they're worth to you, but you're unable to convince them of that, in which case your problem isn't that your employees know each others' salaries, your problem is that your employees don't trust your judgment-- or perhaps that you have poor judgment.
Of course any compensation program which isn't flexible enough to appropriately reward employees for the value they create is flawed, but that has nothing to do with whether or not those rewards are public. In fact, I'd argue that a traditional system where compensation is determined by closed-door negotiations with asymmetric information is uniquely unlikely to do so appropriately.
Essentially what I'm saying is that I'm not sure I agree that open salary information would result in all salaries moving upward.
My theory is that American's believe the ability to assess your own salary and worth is largely part of the attributes of success and worth. Other countries believe more in the employer to define this.
Cool fact - In Norway, everyone's income is public domain: http://skattelister.aftenposten.no/skattelister/start.htm
Same in Washington: http://data.spokesman.com/salaries/state/2012/
Same in California: http://www.sacbee.com/statepay/
Same for Indiana: http://www.in.gov/itp/2406.htm
I suspect there are online databases for most states.
I have to admit to looking up people I know, celebrities, and others on the tax lists. More out of idle curiosity rather than anything else.
I think that a big part in the general attitude is due to the very high tax evasion rate here. Many people have something to hide about their revenues...
I'd say it varies from person to person though because me and another guy at my department managed to get others to open up just by being open about it ourselves and joking.
The sad thing that some people can't endure that without turning it into a pissing contest for some sort of imaginary alpha-male position.
It's very much about context - there are situations/people with whom I wouldn't mind discussing it, but there are also situations where it would be clearly awkward.
In Norway only a few years worth of data is available on line (2007-2010 IIRC) -- after a bit of future shock an amendment was passed to prevent newspapers etc to archive the data and make it available in perpetuity on line. The original intent of the law (when the lists were published in local newspapers) wasn't for the data to be used for other purposes than to check what your peers, your boss, or the prime minister (and other politicians, effectively employed by you) were making.
This whole thing about not discussing compensation seems silly to me -- the only thing I can see come from it is a sort of prisoners dilemma wrt compensation. Your employer knows what everyone's making, but you only know your own salary. End result: Your employer has a stronger bargaining position than you. The whole thing falls apart in the face of unions, of course -- as the union will know what everyone is making anyway.
Either way I think the compensation given to leaders in a company should be know at least internally. Unless they get an unfair share, in which case something should be done either way.
But we are rather strange here in Norway; on a related note, a left-wing newspaper recently made a small splash with its flat salary structure -- everyone earns the same salary, only modified seniority:
http://translate.google.no/translate?sl=no&tl=en&js=...
Wouldn't it be interesting to know that you had received a higher offer than your peers because the company wanted to hire you that much?
Or that you were lowballed but your negotiation skills brought your salary in line with averages?
Or that you are being paid 30% less than the other members of your team doing the same job?
All extremely relevant things to learn.
If you are happy with your current compensation (and I appreciate for some that won't be the case), then do you really want to know? Would you want to go from ignorant bliss to questioning either your own negotiating abilities or the value the company has for you?
I suspect the answer to that depends on the type of person you are, and I don't pretend there's a right one either!
Salary is tied up with ego and emotion, and self-worth, and a person's assessment of how valued they are by their organization. If a person can evaluate this in an objective and cold-blooded fashion, and see things from management's point of view without taking things personally, they can probably stand to know their salary relative to their peers without obsessing about it.
On the other hand, all of us know some people who would obsess and not be able to let it go, and make others' lives miserable about it ("I get $5000 less than that jerk? All he does is browse 4chan all day" "Ha, I knew I was considered more important to this department than Thompson!")
I'm cringing at all the responses in here saying "this is why", as if it's some universal truth, when really it's just rationalizing the particular culture people have been steeped in. Why don't women walk around topless at the beach? Just culture. Some cultures see it as perfectly normal.
I wish people were more okay with it here in America. I make it a point to answer honestly if anyone broaches the subject, and to ask my close friends. Doing my part to change things. :)
Yes, it is cultural, but the answer isn't "it's just culture." There are reasons why it fits in one culture and not in another, and those reasons are interesting.
I realize people saying "it's like this because X" sounds like they are saying something universal. But they aren't. What they are saying is why, given other factors in their culture, things are that way.
Of course it is possible there is no reason for something in one culture. Random things happen. But even if they do, typically those things have effects and other things affect them, and all those things interact in ways that eventually settle down in some fixed point we call "the current culture". And even there, we can say a lot about why that random thing remains and does not vanish, or why it was not changed in a fundamental way, etc.
As for salaries - it's a cultural thing, in the US/UK it is common to mention salaries in job offers (so you could compare easily), in other countries it isn't (or wasn't, like here in Austria, where new laws require mentioning minimum wages ...).
It's pretty trivial to figure out what household income is within 10% if you know a person at all. Your privacy isn't something that employers give a hoot about.
The problems seem to originate from two things; first people often judge their own 'worth' by comparing their work output to others, and two, people who don't understand the details of a particular job seem to think it is much easier to do than it really is.
So in the first case person A, who thinks highly of themselves, and very poorly of a co-worker person B, finds that the co-worker is getting more compensation than they are. This triggers a management issue where someone has to explain to person A the discrepancy. There are a number of real explanations (like Person B is actually doing a harder job and/or providing a more valuable role) that Person A, may be unable to accept.
Or person B may have a role that is significantly different, like they are in marketing (vs engineering) or finance or analysis. Can you compare salaries for someone who cranks out a thousand lines of code a day with someone who can tell you precisely which of those lines of code are making the company money and which ones aren't? Both are great skills, that latter is harder to find, you might pay them a bit more. But explain that to the person writing code? Not easy.
When I was at Google it was proposed a number of times (by engineers) that everyone's salary should just be part of the info available. They didn't do that, but I could see someone like the 37Signals folks or some startup doing it from the start.
I've not worked at a company where that was the case so I can only speculate on what it might be like. For folks who were internally OK with their own perception of self worth it wouldn't matter, for the sociopaths it would give them a new game to 'win', for folks who were not OK with their own self worth it would be devastating.
I do know that individuals can change this, so when your out socially talk freely about specific amounts of money you earn, or save, or spend. But be forewarned that it will make them uncomfortable. But if you can get a community built up where its considered the 'norm' then converting your workplace to use it (assuming they have enough of that community employed) can work.
Everyone knows, for example, that a software consultant level 3 has a pay rate of $XX.
The biggest negative to that type of system, that I've experienced, is that it's hard to incentivize great employees when they are already at their max pay range. For example, you can't give them more money for great work. Also, since everyone knows what everyone else is making, it tends to sometimes create resentment if you think someone else, with the same title or pay scale, is doing sub-standard work compared to you. This generally makes the person less likely to work as hard as before or contemplate other opportunities.
On the positive side though, you don't generally have as many arguments over wages and definitely no surprises when you find out someone's salary. Plus, everyone is well aware of the rungs of progression in their current position, so you tend to know when promotions are warranted and what you'll get as a result which takes a lot of the "I hope they recognize how hard I work" or "I hope I can get $XX more dollars after my next review" out of improving your career. You know exactly what that next rung provides you, and so does everyone else. Therefore, it removes a lot of stress of uncertainty but also possibly diminishes some of the more "go getter" type spirit since you know exactly what it takes to progress, so why go above and beyond?
Here's an example of what I'm talking about, in Ontario (Canada) all public sector salaries > 100K are published publicly. The < 100K public sector salaries are basically public too, just not published on a website :)
http://www.fin.gov.on.ca/en/publications/salarydisclosure/20...
I think the same thing happens in all work places, but if salaries and titles are more open ended, you never really know what you can achieve so you might stick it out longer. In this type of workplace, you explicitly know, and you explicitly know when you have no where left to progress so you make your career choices knowing exactly where you stand.
https://en.wikipedia.org/wiki/General_Schedule_(US_civil_ser...
It's interesting that the engineers wanted salary transparency, that's been my experience as well. I've always thought salary has more to do with perceived class of role in society opposed to value created (in most companies).
That said, I have met engineers who felt their work was 'worth more' than that of a 'marketeer.' Which is not true. But that applies in the general case and not in the specific case.
"I've always thought salary has more to do with perceived class of role in society opposed to value created (in most companies)."
Actually that hasn't been my experience. At least in the SF Bay Area salary budget was managed much as I would imagine a sports team manages their salary budget, which is to say the amount of money the company could spend on salaries was $X and the required business revenue was $Y and the required margin was %Q for everything to 'work'. If the ratio between $X and $Y wasn't there you figured out changes needed to get it into shape. Those challenges could be 'time to ship product' (an engineering problem), 'market visibility' (a marketing problem), 'sales' (a sales problem natch), or sometimes 'cost of goods' (a structural problem). You allocate your $X salary budget to 'fix' the issues.
Class and societal role really never enters the picture in those cases.
There are also examples of sucessful tech companies with little to no marketing department (Craigslist to use an old example). I don't think he same can be said of the reverse.
"... it's clear that plenty of engineers play a marketing role in addition to their role of 'shipping'."
That is an interesting statement to make. Some really great marketers that I've met started with a CS or EE degree, and some really great engineers I've met started with Economics or physics degrees. It isn't the degree that defines them, it is where (and how) they add value to the goals of the company.
In the 'way back' times there was a video format war, it was called 'betamax' vs 'vhs'. Betamax was a better engineered standard, VHS was a better marketed standard. Then there was the "OSI" vs "TCP/IP" network wars, OSI was heavily marketed, but TCP/IP was better engineered [1]. Word vs WordPerfect, Lotus 123 vs Excel, Firewire vs USB, the road is littered with "products" and "standards" where either good marketing or good engineering determined their success or not in the market place.
Generally it seems that if you have two competitors with equivalent engineering teams, bet on the one with the better marketing. If you have two teams with equivalent marketing bet on the better engineering team. Either marketing or engineering can cover for some weakness in the other team, so yes, I value them equally.
That you don't suggests you haven't experienced really great marketing. There was a great post by Joe Kraus (Google Ventures) on this [2]. Something to think about.
[1] Some (many?) would argue that OSI was over-engineered, but either way it was heavily marketed.
[2] http://techcrunch.com/2012/07/24/you-havent-seen-greatness/
I suspect it's also a matter of company stage (I'm predominantly early stage). If I were given $1M to start a tech company, I wouldn't hire any pure marketers. I'd hire engineers who have proven that they can design products.
I think the problem I have with marketers is that it divorces product definition from product construction. In my experience the best products come from the two being as close as possible. Ideally in one person.
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The truth is though that most of the best engineers I know are some of the worst at marketing. They can have a great idea and great execution, but they can't effectively sell people on it, and they often simply think people will automatically buy it because it works and provides a useful service. Rationally, that makes sense.
Unfortunately, that's not really how things work most of the time. If you've started a business, you should know that sales and marketing takes work; even if you have the best product, it's not useful if nobody knows about it, or if it is associated with the wrong thing. That's why marketing is valuable.
http://lincolnloop.com/blog/2012/may/31/lincoln-loop-everyon...
(By the way, this should be obvious, but you should avoid naming numbers unless you absolutely have to. If a future employer asks what bonus you got, just say, regardless of what's true, "I received the highest bonus available for my role and seniority and I'm contractually disallowed to give specific numbers.")
This is also an area where it's hard to tell whether you'll need an upward or downward revision until you're in that situation. Upgrading makes it look like you were a strong performer whereas downgrading gives you a socially acceptable excuse for leaving a job or a better "trend". Of course, the smartest thing to do is not to give these numbers out ever.
I actually think LinkedIn is a bad idea for a lot of people, for the same reason, but pertaining to job titles and dates. Accidental consistency risk is enough of a danger (people who forget their exact job titles 12 years ago) to be cautious, and then consider the fact that, although people don't anticipate ever needing "creative career repair", shit happens and sometimes people do.
Finally, my attitude is just that it's none of anyone's business what I, personally, make. I'll gladly share my estimates of what various levels of engineer can earn on the market as it currently is, and my general sense of what engineers are worth, but strategically important information ought to be safeguarded, especially in this world.
But all is not lost. It's hard to find a startup job where you won't be working closely with people from cultures where discussing your salary, rent etc. is perfectly normal.
That's how I was able to discover that as a woman I was making 75% of what my male colleagues were making. That's a Pandora's box type discovery, and I did stew on it for a while.
But I liked the company, and I didn't want to leave, so I saved that information for the end-of-year talks. They ended up bringing my salary level with the others', and then I was asked politely not to do that again.
It was quite uncomfortable for my boss - despite what you may think, your boss probably doesn't remember your exact salary - and I think my salary was an oversight (I was one of the earlier employees) rather than an intentional slight or because I'm a woman.
But still - what are the chances that could have happened if I hadn't asked my colleagues?
Don't ask, don't get.
I understand that you may be rationalizing it, but I find that hard to believe. I may not have remembered my direct reports' exact salaries, but I certainly knew who made more than who, by approximately what percentage, and why each person was paid what they were.
I've been through the same experience. Not once, twice.
On both occasions I resigned the instant I discovered the discrepancy. On both occasions the reaction by the companies was to suddenly offer a wage correction. But the disrespect had already been shown in my opinion.
I'm in favour of transparency now. I'm also in favour of clearly understood titles/levels, with knowledge of how to progress and what it means to be at a level (not a hierarchy, but a personal learning progression).
Whether or not this works for non-engineering roles I've yet to find out.
Second, some companies like to get away with underpaying people. I'm not sure it's smart but they do. I know I worked with someone who did the same thing I did for 45% less.
Not feasible (or meaningful) if you work for IBM, maybe -- but for a smallish company that should work. If you can't do that math, you probably shouldn't be doing software engineering either...
Just like you're disadvantaged when you fill out the "past salary" boxes on job apps.
With a flood of employees seeking a pay raise similar to the first is feared to cause the employer to develop resentment and distrust to the employee who first received the raise.
Thus employees keep their salaries secret from each other. Fearing it could be higher than a colleague.
I agree, hiding pay is a means of keeping the salaries down. Very far down.
Writer can't think of an explanation for secrecy about money and salaries.
> When I went to negotiate my first salaried job I had no idea how much to aim for. Was $30,000 a reasonable salary? $60,000? I realized then that everyone's aversion to talking about money had left me in the dark as to how the business world worked.
Writer inexplicably still can't think of a reason for secrecy about money and salary.
The reason is obvious -- keeping you in the dark pays off. The employer benefits from your ignorance. Other people in your approximate position, but who have the job you seek, benefit from your ignorance. Everyone benefits from your ignorance except you.
All I can say is, wait until you actually have some money and/or a salary. Then you'll understand.
> Why is everyone so hesitant to share their salaries and other financial information?
Because information has intrinsic value, and particular kinds of information have high intrinsic value. How many times have you read about a settlement between businesses in which the terms were sealed by a court order? Can you think of a reason why?