Why Salary Transparency Is on the Table

Over the last decade, salary transparency has moved from a niche experiment to a major workplace movement. Spurred by efforts to close pay gaps across gender and race, and to correct inequities in negotiation culture, more companies are disclosing salary bands — or even full compensation — to employees or the public.

In 2023, states like California, New York, and Colorado enacted laws requiring salary ranges on job postings (SHRM).

Proponents call it a huge leap for fairness. Critics say it will fuel resentment. So which is it?

The Empowerment Argument

1️⃣ Leveling the negotiating field
Research shows women and underrepresented minorities negotiate lower offers on average than men, and transparency narrows that gap (Harvard Business Review).

2️⃣ Reducing wage compression
When salaries are hidden, newer hires can often make more than loyal employees, creating long-term frustration. Public bands help keep pay structures honest.

3️⃣ Trust and fairness
Employees who see pay processes are more likely to believe their company is fair, even if they still want higher pay. This strengthens engagement and retention (Payscale, 2023).

The Resentment Risks

1️⃣ Context is missing
If salaries are published without explanation, employees may fixate on why they earn less than colleagues without seeing the nuances of skills, experience, or role scope.

2️⃣ Pay differences feel personal
People compare themselves even when differences are rational. That can hurt morale if managers fail to contextualize pay decisions.

3️⃣ Internal poaching
Some teams worry employees will chase the highest-paying internal transfers, disrupting project stability.

Research by researchers from the National Bureau of Economic Research suggests that while transparency does improve fairness, it can slightly dampen morale if not carefully explained (NBER Working Paper 25803).

Practical Examples

✅ Buffer shares complete employee pay formulas publicly. They credit this with better retention and fewer negotiation headaches, though they acknowledge challenges explaining adjustments year over year (Buffer).

✅ Whole Foods has long published employee salaries internally, citing higher trust among teams, although studies of turnover showed a short-term increase in employee churn during the rollout (Kochan, MIT Sloan).

Decision Framework for Leaders

If you’re considering salary transparency, ask:

✅ What transparency level is appropriate?
– public vs. internal vs. pay-band ranges

✅ Are you ready to answer “why” questions?
– how do you explain skills, performance, or market adjustments?

✅ Is your pay data clean and fair?
– hidden inequities will surface, so fix them first

✅ Do you have a communications plan?
– managers need tools and scripts to talk pay with clarity

✅ How will you update compensation frameworks going forward?
– keeping them fresh matters as skills shift

Expert Insight

“Pay transparency works best when coupled with robust pay evaluation systems. Otherwise, it’s a recipe for confusion.”
— Jake Rosenfeld, What Unions No Longer Do (Harvard University Press)

“Publishing pay alone does not remove bias; you must build fair structures before you reveal them.”
— HBR, 2022 (Harvard Business Review)

Final Takeaway

Salary transparency can be empowering — but only if paired with rigorous pay frameworks, manager training, and honest communications.

Without that, transparency can backfire, turning equity discussions into resentment and eroding trust rather than building it.

The question isn’t should you share salaries — but how prepared you are to do it responsibly.