Why is it that tech companies that have strict pay transparency tend to pay less than not only high paying tech companies but also moderately well paying tech companies?
And not just at the high end, where I think this result would be expected by everyone, but also for median pay.
When pay transparency started getting trendy, I was excited because companies use pay secrecy as a way to underpay, but it turns out companies use pay transparency as a way to underpay by even more. What gives?
What's the primary reason tech that companies that practice strict pay transparency (PT) generally pay well below market rates?
@danluu Maybe companies choose to engage in PT when they have difficulty hiring, and difficulty hiring can be caused by underpaying?
If we were talking about stable state, this is basically the same as what @mhoye and @danlyke said. However, is there a reason to expect this is a reasonably steady state as opposed to a transition in progress?
@robryk @mhoye @danluu @danlyke
I think there is some terminology confusion here. PT in the literal meaning of the word just means you know how much everyone gets paid. In practice it means everyone with the same job title has the same base pay (having multiple people same-title different-pay relies on pay not being transparent).
Under this environment you can't ask them to give you and only you a raise like you could if base pay were hidden.
@robryk @danluu @danlyke well, there’s another option: in a PT environment, asking for a raise is necessarily a collective action, and tech sector people are notoriously bad at unions. In that sense, PT becomes a tool for keeping wages low through social pressure.