Why do people earn what they earn?
Sometimes the answer is simple supply and demand. But often it’s something much stranger.
This article appears in the Nov. 2 issue of the Magazine.
Once a year since 1983, Parade has published its “What People Earn” issue. It should come as no surprise that this is consistently the magazine’s best read feature. Even today — after that once robust weekly supplement to this and 700 other newspapers has been chopped back and sold — Parade’s pay roundup remains addictive reading.
For our gawking pleasure, Parade editors always include the estimated annual hauls of assorted celebrities, from Australian actor Chris Hemsworth ($58 million) to his pauper of a kid brother Liam ($1.75 million) to Liam’s wrecking-ball-swinging, tongue-extending ex Miley Cyrus ($76.5 million).
But what always gets me are the regular people. How can 51-year-old Laurie Muscha of North Dakota, who logs up to 11 hours a day behind the wheel of a truck, possibly get by on just $24,000 a year? We can’t help but compare her with 43-year-old Sarah Townsley, who pulls down $107,000 as a court reporter in Louisiana. We learn about jobs we’ve never given much thought to, from a museum exhibit builder in Worcester (Donald Ricklin, $29,000) to a Thomas Edison impersonator in New Jersey (Patrick Garner, $75,000).
I’ve been a faithful reader of “What People Earn” pretty much since its inception. And I’ve long marveled at the magazine staff’s ability to get regular Americans to show their paychecks to complete strangers, thereby penetrating one of our culture’s few remaining zones of privacy. Salary silence is such an ingrained American norm that I can almost picture roving 19th-century thinker Alexis de Tocqueville struggling to persuade innkeepers and stagecoach drivers to cough up the size of their wages. Yet it dawned on me this year that there was something fundamental I still didn’t understand. All those issues of Parade had taught me nothing about why people earn what they earn.
Intuitively, most of us understand why the chosen few with perfect cheekbones in Hollywood or the genetic freaks populating pro sports would be raking in silly money. The talent pool is limited in those industries, and there’s so much cash sloshing around them. Who’s going to begrudge the main attractions their big shares? Similarly, most of us accept that rigorously trained neurosurgeons asked, literally, to hold other people’s brains and lives in their hands should be very well compensated.
But how to explain why the pediatrician who cares for your kid from infancy through the shoals of adolescence should make 19 percent less a year than the orthodontist who affixes some hardware to his teeth at age 12? Or, for that matter, why a physician specializing in orthopedics should make two and a half times one specializing in HIV treatment? The most common explanation for pay differences across fields is supply and demand. But in my hunt for the logic behind salary structure, I would be reminded again and again just how incomplete an answer that is.
Take, for example, the industry that has seen the most dramatic pay transformation over the past three decades. In a new study tracking top earners since 1981, researchers with the National Bureau of Economic Research write, “We find that the dominance of the finance and insurance industry is staggering.” They report that in 2012 finance and insurance accounted for around one-third of workers in the top 0.1 percent of earners. Yet that’s a new phenomenon. Back in the early ’80s, the top of the top tended to be doctors (and behind them lawyers).
Was it simply the free market that rained all this good fortune down on the world of high finance? It turns out that the “perfect market” that free-market economists talk about is far from perfect. And while the push and pull between supply and demand remains a driving force in earning disparity, a host of surprising, sometimes quirky, and sometimes cynical external forces are quietly at work reshaping the landscape of pay in America.
THE KITCHEN CONUNDRUM
Why servers at high-end restaurants make so much more than cooks
It’s a late thursday afternoon at Myers + Chang, the funky Asian restaurant in the South End, and the bustle is beginning to build as the staff prepares for the dinner rush.
I grab a table with owners Joanne Chang and Christopher Myers, whom I’ve known for nearly 20 years. I come with a question: Why can the waiters and waitresses at expensive restaurants earn so much more than the people actually making the food?
Myers + Chang is a casual place with reasonable prices, so the pay gap between servers and cooks there is narrower than at higher-end places. Still, the couple has a great handle on the city’s dining landscape. They met two decades ago at Rialto in Cambridge, then one of the area’s hottest new restaurants. Myers was a co-owner, Chang was pastry chef. (I got to know them because my wife worked there under Chang.) Myers went on to run several high-end restaurants in town, including Radius, Via Matta, and Great Bay. Chang went on to open the successful string of Flour bakery/cafes. Eventually, she and Myers unified their worlds, opening the imaginative restaurant bearing their two names — and getting married.
Several restaurant veterans estimate that full-time servers at Boston’s high-end places are pulling down $50,000 to $100,000 a year. That’s two to three times what a typical line cook is making. At an industry forum earlier this year, Boston chef Barbara Lynch of Menton and No. 9 Park noted that the disparity is even worse in other markets. “What I’ve seen in San Francisco is that servers do make over $120,000 [a year], and you’re paying a line cook nine, ten dollars an hour,” Lynch said. “It’s really hard to get good back-of-the-house staff and to retain them. At some point, we have to learn to equal it out.”
I ask Myers and Chang if this divide makes sense, since customers are presumably coming in more for how the food tastes than how chatty the server might be. Myers takes a wider-angle view. “There’s no one more valuable than a competent and charismatic server,” he says. “They’re your front line of offense.” A cheerful, problem-solving server can be the difference between a customer heading straight to Yelp to vent and one who is so satisfied that she makes a follow-up reservation on the way out the door.
Chang says that from time to time she’ll hear grumbling from her cooks about the unfairness of servers making more. Despite being a champion of the kitchen, she tells them: “If you’d like to go to the front of the house, more power to you. It’s not easy keeping a smile on your face for the whole night.” And that smile is essential: Many restaurants pay servers just $2.63 an hour, the state minimum wage for tipped workers. The real paydays come from tips.
But the server-as-secret-weapon tells only part of the story. After sifting through lots of academic papers and speaking to economists, I came to think of the depressed pay for cooks relative to waiters as a sort of “dream penalty” at play.
Spend a day asking middle schoolers what they want to be when they grow up and I guarantee you’ll never hear “waiter,” “actuary,” or “portfolio manager.” Instead, their dream jobs tend to reflect activities they participate in: the performing arts, writing, teaching, cooking, and sports. So perhaps it’s no coincidence that there are so many underpaid actors, reporters, teachers, cooks, and minor league baseball players out there.
I’ve seen these dynamics at work in the career path of my wife, Denise. As an eighth-grader, during a visit to the Culinary Institute of America in New York’s Hudson Valley, she promised herself she would return one day as a student. But when college application time came around and she told her parents about her dream to attend the CIA, they batted it down. In the 1980s, culinary programs were still largely seen as trade schools for young guys with plans to work in the industrial kitchens of Hiltons and Marriotts.
Denise went on to graduate magna cum laude from Tufts with a double major in international relations and Spanish, well positioned for a lucrative career in global consulting or a similar field. By the mid-1990s, when she switched gears to follow her cooking dream, the profession had become much more glamorous, spurred on by the Food Network. Denise went to work for Chang, an honors grad from Harvard with a degree in applied mathematics and economics who had left a fast-track job in management consulting. And they were both working for chef Jody Adams, who had an anthropology degree from Brown. Denise, who eventually fulfilled her dream by earning her associate’s degree from the CIA, also benefited from the celebrity-chef era, moving into a job overseeing cooking operations on TV shows as a culinary producer.
What hasn’t changed over the years is what line cooks get paid. Denise was getting about $8.50 an hour two decades ago, which actually seems pretty good, since cook wages haven’t budged much since.
“It’s essentially a training wage,” says Kevin Hallock, chairman of the Cornell economics department and author of the book Pay . A cook with aims of one day headlining his or her own restaurant “is entering a tournament,” Hallock says. “The best way to make it really big as a celebrity chef is to be an apprentice to a celebrity chef.” That’s how it worked out for Chang, now a best-selling cookbook author and acclaimed chef. (Of course, high-end restaurants with big-name chefs make up only a fraction of the industry. Nationally, restaurant employees — many of whom have limited education and English skills — are at the bottom of the pay ladder, with a poverty rate that is nearly three times that of workers outside the industry.)
Waiters and waitresses often have a different dream, whether that’s being an actor or an oboist. They’ve either put those passions on hold while they wait tables, or their tips pay the rent so they can continue to pursue their true interests. And that’s the flip side of the dream penalty: When a job that is valuable to a company feels more like a job and less like a calling, the employer will typically have to work harder to attract and retain good people for that position.
> The Rising Restaurant Workforce
317,400 — Number of Massachusetts restaurant employees in 2014
335,400 — Number projected for 2024
Source: National Restaurant Association
THE LICENSING BUMP
Why realtors just love regulation
People love to complain that the government takes too much out of their wallets. But licensing demonstrates how the government can help to fatten them, too. Licensed jobs require people to get permission from their government (usually state) before they can do them legally for pay. Massachusetts licenses more than 50 professions, from electricians to electrologists.
University of Minnesota economist Morris Kleiner notes that in the 1950s, about 5 percent of workers were licensed, mostly for jobs considered to have an impact on public safely, while 33 percent belonged to a union. Today, those numbers have nearly flipped, with about 30 percent of workers licensed and only 6 percent of private-sector workers in a union.
Things have gotten out of hand with licensing, Kleiner says. In Louisiana, florists must be licensed, and until recently monks were not allowed to sell coffins, only licensed funeral directors. In Massachusetts, cosmetologists need 1,000 hours of professional training; home inspectors need just 75 hours in the classroom. Kleiner says it’s no mystery why licensing continues to rise — and it’s not for the well-being of the general public.
His research has found that licensing drives up wages for license holders in their industries by 15 to 18 percent. Following the model of the ancient guilds (and the unions that followed them), these licensing requirements can help restrict the supply of workers and boost pay, he says, “working through the monopoly effect.”
For my money, the most persuasive demonstration of this phenomenon is a study of licensed real estate agents in Massachusetts. In 1999, the Legislature, following vigorous lobbying by the Massachusetts Association of Realtors, passed a law requiring agents to complete 12 hours of continuing education every two years to remain licensed. The industry argued that the new standards would increase professionalism and improve customer service. But a 2010 analysis by then Suffolk University economists Benjamin Powell and Evgeny Vorotnikov found absolutely no improvement in the quality of service provided by Massachusetts agents, as measured by complaints to the state licensing board. What the researchers did find, however, was a dramatic reduction in the overall number of active agents — and an increase of 11 percent to 17 percent in the incomes of those who remained in the business.
> Training Time
372 days — Average time US cosmetologists spend in training to get licensed
33 days — Average time spent by EMTs
Source: License to Work: The Irrationalities of Occupational Licensing, 2012, Institute for Justice
THE PRIMARY CARE PENALTY
How a government attempt to balance doctor pay backfired
Why do orthopedic surgeons get paid so much more than pediatricians and family doctors? Right now, it comes down to something called Relative Value Units, or RVUs. Those are the bitcoin for the fee-for-service system by which Medicare pays doctors. But it’s not just government-run Medicare. Commercial insurance companies and health care employers use the Medicare schedule of RVUs as the basis for determining pay rates, multiplying it by a certain negotiated value to come up with a dollar amount, says Dr. Gene Lindsey, former CEO of Atrius Health, a medical group serving a million patients in Massachusetts.
RVUs were the brainchild of Harvard School of Public Health researcher William Hsiao and his team. In the early 1990s, Lindsey says, the federal agency overseeing Medicare and Medicaid introduced them as a way of injecting more fairness into the system and closing the yawning gap between primary and specialty care. The setting of RVUs was supposed to take into account a host of factors, including a task’s complexity — say reading an EKG or performing a hernia operation — and the training the physician needed to carry it out.
But in large part because specialists dominate the governing body that sets RVU values, Lindsey and other industry observers say, the pay gap between specialists and primary care docs has only widened. In a blog post a few years ago, for instance, the journal Health Affairs compared RVUs and Medicare reimbursements for a 25-minute patient visit with a primary care doctor ($111) and a 15-minute procedure with an ophthalmologist ($697).
Now, health care financing is in the process of moving away from fee-for-service and toward a system in which doctors are paid not for what they do but for what they achieve. Once again, reformers are predicting that the gap will begin to close. Once again, that remains to be seen.
> Data on Doctors
$222,300 — Average compensation for primary care physicians in eastern United States
$373,846 — Average compensation for specialists
THE STUDEBAKER SPIKE
How an automaker’s financial failure created a Wall Street windfall
In the closing days of 1963, Studebaker, the automaker that was by then hemorrhaging money, announced that it would shutter its plant in Indiana and default on its employee pension plan. While Studebaker’s retirees and older workers ultimately received their full pensions, those between ages 40 and 59 got only about 15 percent of what they were owed, and those younger than 40 got nothing.
The Studebaker collapse midwifed a campaign to create a government insurance program that would guarantee private pensions. Change came slowly, but one decade and two presidents later, Gerald Ford signed into law the Employee Retirement Income Security Act of 1974, known by the clunky acronym ERISA.
If the government was going to guarantee these private pensions, it would insist that employers do their part. ERISA imposed new fiduciary standards that required employers to increase tremendously their level of financial contributions to employee pension plans and to make sure those assets were invested wisely. “That opened the floodgates,” says Mike Clowes, author of the book The Money Flood: How Pension Funds Revolutionized Investing . In 1974, private pension assets in this country totaled $115 billion. Today, that figure is $8.36 trillion, plus another $9 trillion in assets in local, state, and federal pension plans.
Prior to ERISA, banks and insurance companies dominated the money management field, based on their institutional reputations for probity rather than their return-on-investment performance — or the whiz-kid reputation of any particular employee. In fact, the performances of these old-name banks and insurers were entirely unremarkable, says Clowes — as were the salaries of their managers.
But the combination of that money flood and the tightened standards (and higher thirst) for investment performance transformed the industry. Ambitious money managers split off from the old firms and started their own shops. With small staffs and low overhead and fees based simply on a percentage of assets under management, these firms saw profits soar. Instead of those riches going to the institutions, they flowed directly to the people making the investment decisions. Nimble innovators like Boston’s Batterymarch Financial Management led the way in reshaping the industry with an emphasis on using computers for quantitative analysis. It helped that a bear market in 1974 exposed the particularly poor performance of established banks.
At the dawn of the 401(k) era in the 1980s, the star system of celebrity fund managers really emerged. And no star shone brighter than Peter Lynch of Fidelity’s Magellan Fund. Lynch, who had started at Fidelity in 1969 as a $16,000-a-year analyst, took over Magellan in 1977. By the time he retired 13 years later, he had delivered a nearly twenty-fivefold return for the fund (compared with a fourfold increase of the Dow during the same period) and saw its assets under management explode, from less than $20 million to $13 billion. During his final year as fund manager in 1990, Lynch’s compensation was reported to be in the range of $3 million to $10 million.
Finance pay would never touch ground again, accelerating into the 1990s and right up until the 2008 crash. The biggest pay packages moved from mutual funds to private equity to hedge funds — all of them making Lynch’s compensation look like a pittance. Last year, CEO Jamie Dimon of JPMorgan Chase made $28.5 million, a pretty sum that was overwhelmed by top private equity earner Leon Black of Apollo Global Management, who made $546.3 million, a pretty sum that was blown away by top hedge fund earner David Tepper of Appaloosa Management, who made $3.5 billion. Is it any wonder so many Ivy League graduates skip medical and law school in favor of Wall Street?
In the beginning, it was easy to justify the salaries for the star performers. But Rick Lannamann, who recently retired after 36 years as a top recruiter of finance executives, says some of the logic behind those astronomical salaries has gone away. Hedge funds as a whole have underperformed the market for several years, even if their higher fees have kept the cash rolling in. And with the ceiling gone on compensation, the floor has been raised for the entire finance industry. “Most organizations are gearing compensation to pay for a star,” Lannamann says, “and they’re not all getting stars.”
Following the crash, the Obama administration appointed September 11th victim fund special master Ken Feinberg to serve as “compensation czar” overseeing pay at seven companies that taxpayers had bailed out. Feinberg was astounded to see how “out of whack” incentive structures had become following three decades of deregulation. Immediately after its bailout, Citigroup was planning to pay one of its employees a $100 million bonus, until Feinberg stepped in. “In what had started out as a rather staid industry,” he tells me, “a Wild West mentality took hold on Wall Street.”
Despite the reform efforts following the 2008 crash, the new normal today looks a lot like the old one. During our most recent, thoroughly uneven recovery, the top 1 percent captured 95 percent of the total income growth.
> Skyrocketing CEO Pay
$1,463,000 — Average annual CEO compensation in 1978 (in 2013 dollars)
$15,175,000 — Average in 2013
Source: Economic Policy Institute Issue Brief No. 380, June 12, 2014, a study of the 350 publicly traded firms with the highest revenue
THE COLLEGE WAGE PREMIUM
How the Vietnam draft wreaked havoc with pay
When we think of government influence over private salaries, our minds tend to go directly to concrete actions, like the minimum wage. As comedian Chris Rock once joked, drawing on his experience flipping burgers at McDonald’s, when your boss pays you minimum wage, he’s got a clear message for you: “Hey, if I could pay you less, I would, but it’s against the law.” Yet the debate over the minimum wage is largely a distraction from the enormous though largely unseen impact that government has over what middle- and high-income people get paid in the open market.
Consider investment in education. In 1900, 40 percent of American jobs were in agriculture, whereas today that rate is just 2 percent. Back then, 11 percent of the population was illiterate, the typical American went no further than the eighth grade, and brawn tended to be far more essential than brains.
But as MIT economist David Autor notes in a new paper, leaders in the late 1800s and early 1900s, particularly in the farm states, anticipated the coming tectonic shift in the economy and worked to prepare the population for it. The United States became the first nation in the world to offer universal high school. Then the focus shifted to college. While only 6 percent of Americans had a bachelor’s degree in 1940, that rate grew sharply each year from the end of World War II until the early 1980s. The federal GI Bill and massive investment in state university systems helped make the climb possible, but there was also something else at work. And the need to understand it became more pressing when the growth rate of college completion fell by nearly half in 1983, not to rebound again until 2004.
Drawing on the work of other economists, Autor explains the surprising answer: the Vietnam War. College deferments from the military draft “artificially boosted college attendance,” he notes. That created a glut of educated workers, which depressed the usual “college wage premium” enjoyed by workers with bachelor’s degrees. In the ’70s, with the draft gone and the wage premium reduced, college enrollment dropped sharply, especially among young men. Half a decade later, when those men would have otherwise been collecting their bachelor’s degrees, college graduation rates saw a corresponding drop.
At the dawn of the 1980s, with computers and automation extinguishing lots of jobs, the demand became more urgent for adaptable, well-educated employees, those we’d later call “knowledge workers.” That spike in demand came at precisely the time when the supply, thanks to the Vietnam effect, was particularly low. This imbalance had the effect of dramatically ratcheting up the college wage premium once again, which in turn produced a surge in inequality that would play out for decades. Since the early 1980s, the earnings gap between male college and high school graduates has doubled, from $17,411 per year (in 2012 dollars) to $34,969 per year.
It’s all relative, however. College grads are earning more, but the bigger change has been the plummeting wages for high school grads whom the knowledge economy has left behind.
THE Rx FOR EQUITY
Why the invasion of big pharmacy chains was actually good for women
Many jobs that have traditionally been dominated by women — teachers, nurses, day-care workers — continue to carry the weight of history. It wasn’t that long ago when America’s male-dominated power structure viewed a woman’s wages as, by definition, supplemental to her husband’s. That prevailing attitude kept salaries for those jobs artificially low.
Perversely, even in traditionally “female” professions, women now make less than men. Female registered nurses make on average 91 percent of what their male co-workers do, according to a new study from the American Association of University Women, a nonprofit advocacy group. Female high school teachers make 93 percent of what males do. Predictably, in traditionally “male” jobs, the gender gaps are even worse, from computer programmers (84 percent) to financial managers (70 percent). Overall, American women earn on average 78 percent of what men do.
Some of the gap can be explained by women’s ages and choices in college major, occupation, geography, and marital status. But the association study found that even when those factors are accounted for, there remains an unexplained gap in what men and women make in similar jobs. One year after college graduation, that gap is 7 percent, and after a decade it climbs to 12 percent. Is this simply the remnants of our thoroughly patriarchal past?
A new study by Harvard economist Claudia Goldin may offer an intriguing answer: face time. Too many workplaces, she argues, continue to offer pay that is disproportionately higher to employees who log long hours — or, more to the point, hours actually in the office. She writes that “small differences” in office hours, like a short maternity leave or slightly reduced schedule, “translate into large differences in pay.” This is particularly true in law and finance, where the gender gap remains persistently wide.
But Goldin offers a ray of hope in the example of pharmacists. And she singles out pharmacists at the big chains such as CVS and Walgreens, of all places, which tend to draw scorn for muscling out all of our beloved corner druggists. Forty years ago, only 25 percent of pharmacists worked for large chains and hospitals, but today that figure has climbed to 75 percent. As the chain dominance has grown, the gender pay gap has shrunk for pharmacists to the point where it has virtually disappeared. (And pharmacists have become only better compensated — it’s the eighth-best-paid profession for men and third-best for women.)
How did this happen? Goldin and other economists point to the changes in the industry that sprang from the replacement of all those largely male-owned corner drugstores. With increased standardization of procedures and drugs at these bigger operations, pharmacists became more interchangeable. That, in turn, greatly reduced the penalty that pharmacists faced for reducing their hours, a penalty that continues to be high for women in other fields who downshift to care for children. In contrast, more than 40 percent of female pharmacists with children work part time from their early 30s until age 50. Their nontraditional schedules don’t negatively affect their productivity, so their career paths and wage growth aren’t stalled.
Interestingly, this wonderful leap in equality wasn’t the result of government intervention. Nor, Goldin says, was it because female pharmacists were married to guys who picked up more of the duties at home. She does note, however, that the latter is never a bad thing.
> The Gender Gap
In every state, women working full time earn less than their male counterparts.
New York — 86¢ on the dollar
Massachusetts — 82¢ on the dollar (median for men $60,588; median for women $49,470)
Louisiana — 66¢ on the dollar
National average — 78¢ on the dollar
Source: The Simple Truth about the Gender Pay Gap, American Association of University Women
THE PRICE OF SILENCE
Why don’t we compare paychecks?
I’m sitting with Erika Chin in the cafeteria of an office park building on Route 128 in Waltham, the epicenter of the tech-fueled Massachusetts Miracle in the 1980s. Chin has a wealth of knowledge about pay, running her own boutique firm, Chin Compensation & Performance of Acton, after a career spent working for some of the biggest employers from the region’s past, from Wang Laboratories to Fleet Financial to Polaroid. These days, she advises companies representing the region’s future, particularly in life sciences and technology.
We’re huddled over spreadsheets on her laptop as she shows me how she views a company through her “comp lens.” She’s talking about a variety of factors, from how much an employer can afford to pay to how much competitors are paying. But I’m interested in a more cosmic question: If she were creating a salary structure for a startup too new to have any meaningful industry comps, how would she go about assigning a value to each employee? After all, we’ve done that as a society, deciding that the day-care workers who care for our toddlers and home health aides who care for our elderly parents should be at the lowest end of the pay scales, whereas equities traders and chemical engineers should be closer to the top. She begins talking about evaluating how critical certain employees’ roles are to the company. Are they working on a project that could be the next killer app or doing more routine work?
Just then, her voice is temporarily drowned out by the sound of metal screeching across a tiled floor. I look up to see a middle-aged custodian rearranging the chairs at an adjacent table. A few tables away, I spot a bald middle-aged man wearing a sharp navy suit and a yellow power tie as he chats with two other nicely dressed men of similar age.
Pointing at the custodian, I ask Chin why he likely makes so much less than the bald man with the power tie. (My hunch is strengthened when the custodian turns around, revealing a patch on his uniform for a private janitorial service. The frequent outsourcing of custodial services has usually led to lower pay for the actual workers.)
Chin pauses for a minute, peering over her glasses. “A custodian is more of a plug-and-play job,” she says. It would likely be easier to train a replacement for him than the guy in the power tie.
The custodian disappears before I get a chance to ask him what he makes. Even if I had caught him, I’m not sure he would have revealed his pay. I ask her why the subject of salaries at private companies remains such a shrouded one. After all, in the public sector, the local newspapers print those annual lists of the highest paid town employees, and every year people scratch their heads at why that police sergeant is making twice as much as the chief. (Paid details!)
I mention to Chin the high-tech companies on the vanguard of salary transparency. Why shouldn’t pay structures be more out in the open, to lessen the advantage that employers have over workers? For example, San Francisco-based Buffer, a developer of social-media management tools, posts the full compensation for each of its employees, from the CEO ($175,000) to the lowest-paid customer service “happiness hero” ($60,000).
Chin strongly opposes the idea, arguing that it will become a distraction and potential source of bickering. “Why does Mary make more than I do, when I work twice as hard?” Then again, it’s not as if that kind of bickering doesn’t already happen, only in most places it’s fueled by speculation rather than real numbers. (When I reach out to Buffer’s senior happiness hero, Asa Nystrom ($84,000), she says that the policy promotes harmony, since no one has to waste time wondering what co-workers are making. Nystrom acknowledges that, as a native of “socialist Sweden,” privacy about salaries has never been a priority for her.)
Why, I ask Chin, are we Americans so uncomfortable with sharing our salaries? “People don’t want to have their value reduced to a single number — I’m a 40k person or I’m a 78k person,” she says.
“But isn’t that what we just did with the custodian and the power-tie guy?”
“No,” she replies. “We were putting a value on a particular job, not on a particular person.”
In the end, maybe that explains our discomfort. We all know that what we get paid can’t begin to measure our value. Still, it’s hard to look at the numbers on our pay stubs each week and not detect a strong message coming through.