Want to Know What Your Coworkers Make? In Norway, It's the Law

July 26th 2017

In the United States, it's typically seen as rude to ask someone how much they make. But what if you didn't have to ask because that information was already public? Well, that's how Norway does it, and it turns out there are many benefits to knowing how much one's peers make.

Since 2001, Norway has had "pay transparency," which means any citizen can go online and see another citizen's salary (and how much they paid in taxes). Quartz explained that this began as a way to "increase people’s trust in the tax and social-security system."

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Norwegians pay roughly 40 percent of their income in taxes, and have a lot of successful social welfare programs because of it; the average person in the U.S. pays less than 30 percent.

Ricardo Perez-Truglia, an assistant professor of economics at UCLA, told ATTN: that Norway's embrace of pay transparency has a long history.

"Tax records have been publicly available in Norway for centuries," Perez-Truglia said. "However, before 2001, these records were not easily accessible."

You might feel uncomfortable knowing everyone you've ever met can see how much you make, but Norway changed its program in 2014 so at least you can get an email saying who looked. This has reduced the number of people creeping on their friends out of curiosity. 

Pay transparency can help close the wage gap

Many argue that making people's salaries public could help close the gender wage gap. As ATTN: has reported, men getting paid more than women for the same work is still a major problem in the United States. Pay transparency could help companies identify wage gaps and help female employees negotiate higher salaries.

"If systematic inequalities in pay exist in a workplace, pay transparency is an important step to revealing this," Emiliano Huet-Vaughn, an assistant professor of economics at Middlebury College who studies pay transparency, told ATTN:. He said that transparency alone might not fix the problem if there is a gap, because it will also "depend on the resulting effects of the disclosure on individual salary negotiations, worker decisions to leave and look for greener pastures... the collective bargaining environment."

In addition, Perez-Truglia, noted, "Employers may take advantage of uninformed employees, such as employees from minority groups, by under-paying them. By making all salaries public, you may empower these employees to ask for salary increases, or to find better jobs."

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Pay transparency can increase productivity

Huet-Vaughn did a field experiment in 2015 where he looked at how people knowing their colleagues' salaries impacted work performance. He found that productivity increased when workers could look at other people's salaries, in part because they were motivated to reach salaries above their own.

"I find that access to the relative earnings information motivates greater productivity in workers," Huet-Vaughn said. "This may be because the additional earnings information serves to activate status-seeking or competitive social preferences."

Other researchers have also found that people tend to become more motivated at work when they know what others are making.

How the United States compares

The United States doesn't have pay transparency like Norway does, but there are some sectors where pay transparency exists.

"There already is a fair amount of pay transparency in one leading sector in the U.S.: the government," Huet-Vaughn said. "Citizens can typically find out government worker earnings, with many state and federal workers' annual earnings being searchable online."

Some tech companies have also chosen to practice pay transparency, including the social media management company Buffer. Whole Foods also practices pay transparency.

John Mackey, CEO of Whole Foods, has said pay transparency is a "good thing" because it stops people from gossiping. It also "creates greater justice in compensation, because any time favoritism or nepotism is seen, it's very exposed, and if you know it's going to be seen, you're less likely to engage in it."

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