Pay inequality is common in most workplaces. You get paid significantly more than your subordinates, your boss gets paid more than you, and your boss’s boss gets even more. In many large organizations, some employees can take home paychecks tens or hundreds of times more than others.
The first thing we looked at was manager salary. Through an online survey, employees had to guess the salaries of their managers. To make sure they had incentives to be truthful, we offered rewards for accurate guesses. The vast majority of respondents missed the mark by a significant margin . And this is where the action happens: by the flip of a virtual coin, we decided whether to “correct” a respondent’s estimate, by providing accurate information from the firm’s official salary records.
To measure the behavior of these two groups of employees, we gathered daily timestamp, email, and sales data for the year following our survey. To our surprise, finding out that their managers got paid more seemed to make employees work harder than those who did not find out the true salary. Our estimates suggest that discovering that the boss’s salary is 10% higher than originally thought causes employees to spend 1.5% more hours in the office, send 1.3% more emails, and sell 1.1% more.
There is a caveat, though. While employees seemed perfectly capable of handling this vertical inequality, they did not handle horizontal inequality nearly as well.
Everyone knowing everyone’s salaries would be one of the best ways to work towards equality in pay
'It's good to be the king.' ~ Mel Brooks, 'History of the World Part 1'
I know a guy who had a $375,000 an hour salary and demanded a raise. He subsequently got fired when the board of directors finally bothered to familiarize themselves with how much money he was making (stealing from the shareholders)
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