Study: Salary Knowledge Only Hurts Morale


Ignorance is bliss, at least when it comes to learning the salaries of your co-workers.

According to a new study from a group of Berkeley economists, the more you know about what your co-workers earn, the less satisfied you become with your own job, at least if it turns out your salary is below average in the workplace.

“Workers with salaries below the median for their pay unit and occupation report lower pay and job satisfaction, while those earning above the median report no higher satisfaction,” the study concluded. “Likewise, below-median earners report a significant increase in the likelihood of looking for a new job, while above-median earners are unaffected.”

In other words, if it turns out that if some of your co-workers earn more than you, and you actually earn less money than the average person in your profession or workplace, your job satisfaction is more likely to go down. However, if it turns out your earn more than the average worker in your workplace or profession, the fact that some of your co-workers earn more than you will likely have less of an impact on your job satisfaction.

In order to determine this, the researchers relied on a very real online tool launched by the Sacramento Bee newspaper two years ago, which publicizes the salaries of all state workers. The researchers simply alerted a group of employees at the University of California to the existence of this site and surveyed their reactions.

The study found that workers who discovered they earned less than co-workers not only felt slighted personally, but also came to believe that income inequality in the country as a whole was “too large.”

The researchers concluded that more transparency with worker salaries could be debilitating to a company.

“Our findings indicate that employers have a strong incentive to impose pay secrecy rules. Forcing employers to disclose the salary of all workers would result in a decline in aggregate utility for employees,” the researchers note in the study.

Yet, these days, it is much easier to find the average salary for your profession, thanks to online career sites like Payscale and SimplyHired. While this could lead to more dissatisfaction with your job, there is an upside: These online tools are also useful to help you to negotiate a better starting salary at a new job or to use as leverage when asking for a raise.

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