wingolog

a simple (local) solution to the pay gap

24 March 2016 9:49 PM (justice | tech | pay gap | igalia)

International Working Women's Day was earlier this month, a day that reminds the world how far it has yet to go to achieve just treatment of women in the workplace. Obviously there are many fronts on which to fight to dismantle patriarchy, and also cissexism, and also transphobia, and also racism, and sometimes it gets a bit overwhelming just to think of a world where people treat each other right.

Against this backdrop, it's surprising that some policies are rarely mentioned by people working on social change. This article is about one of them -- a simple local change that can eliminate the pay gap across all axes of unfair privilege.

Ready?

OK here it is: just pay everyone in a company the same hourly wage.

That's it!

on simple, on easy

But, you say, that's impossible!

Rich Hickey has this famous talk where he describes one thing as simple and the other as easy. In his narrative, simple is good but hard, and easy is bad but, you know, easy. I enjoy this talk because it's easy (hah!) to just call one thing simple and the other easy and it's codewords for good and bad, and you come across as having the facile prestidigitatory wisdom of a Malcolm Gladwell.

As far as simple, the substance of equal pay is as simple as it gets. And as far as practical implementation goes, it only needs buy-in from one person: your boss could do it tomorrow.

But, you say, a real business would never do this! This is getting closer to the real issues, but not there yet. There are plenty of instances of real businesses that do this. Incidentally, mine is one of them! I do not intend this to be an advertisement for my company, but I have to mention this early because society does its best to implant inside our brains the ideas that certain ideas are possible and certain others are not.

But, you say, this would be terrible for business! Here I think we are almost there. There's a question underneath, if we can manage to phrase it in a more scientific way -- I mean, the ideal sense in which science is a practice of humankind in which we use our limited powers to seek truth, with hypotheses but without prejudice. It might sound a bit pompous to invoke capital-S Science here, but I think few conversations of this kind try to honestly even consider existence proofs in the form of already-existing histories (like the company I work for), much less an unbiased study of the implications of modelling the future on those histories.

Let's assume that you and I want to work for justice, and in this more perfect world, men and women and nonbinary people will have equal pay for equal work, as will all people that lie on all axes of privilege that currently operate in society. If you are with me up to here: great. If not, we don't share a premise so it's not much use to go farther. You can probably skip to the next article in your reading list.

So, then, the questions: first of all, would a flat equal wage within a company actually help people in marginalized groups? What changes would happen to a company if it enacted a flat wage tomorrow? What are its limitations? How could this change come about?

would it help?

Let's take the most basic question first. How would this measure affect people in marginalized groups?

Let us assume that salaries are distributed inversely: the higher salaries are made by fewer people. A lower salary corresponds to more people. So firstly, we are in a situation where the median salary is less than the mean: that if we switched to pay everyone the mean, then most people would see an increase in their salary.

Assuming that marginalized people were evenly placed in a company, that would mean that most would benefit. But we know that is not the case: "marginalized" is the operative term. People are categorized at a lower point than their abilities; people's climb of the organizational hierarchy (and to higher salaries) is hindered by harassment, by undervalued diversity work, and by external structural factors, like institutionalized racism or the burden of having to go through a gender transition. So probably, even if a company touts equal pay within job classifications, the job classifications themselves unfairly put marginalized people lower than white dudes like me. So, proportionally marginalized people would benefit from an equal wage more than most.

Already this plan is looking pretty good: more money going to marginalized people is a necessary step to bootstrap a more just world.

All that said, many (but not most) people from marginalized groups will earn more than the mean. What for them? Some will decide that paying for a more just company as a whole is worth a salary reduction. (Incidentally, this applies to everyone: everyone has their price for justice. It might be 0.1%, it might be 5%, it might be 50%.)

Some, though, will decide it is not worth paying. They will go work elsewhere, probably for even more money (changing jobs being the best general way to advance your salary). I don't blame marginalized folks for getting all they can: more power to them.

From what I can tell, things are looking especially good for marginalized people under a local equal-wage initiative. Not perfect, not in all cases, but generally better.

won't someone think of the dudes

I don't believe in value as a zero-sum proposition: there are many ways in which a more fair world could be more productive, too. But in the short term, a balance sheet must balance. Salary increases in the bottom will come from salary decreases from the top, and the dudebro is top in tech.

We should first note that many and possibly most white men will see their wages increase under a flat-wage scheme, as most people earn below the mean.

Secondly, some men will be willing to pay for justice in the form of equal pay for equal work. An eloquent sales pitch as to what they are buying will help.

Some men would like to pay but have other obligations that a "mean" salary just can't even. Welp, there are lots of jobs out there. We'll give you a glowing recommendation :)

Finally there will be dudes that are fine with the pay gap. Maybe they have some sort of techno-libertarian justification? Oh well! They will find other jobs. As someone who cares about justice, you don't really want to work with these people anyway. Call it "bad culture fit", and treat it as a great policy to improve the composition of your organization.

an aside: what are we here for anyway?

A frequent objection to workplace change comes in the form of a pandering explanation of what companies are for, that corporations are legally obligated to always proceed along the the most profitable path.

I always find it extraordinarily ignorant to hear this parroted by people in tech: it's literally part of the CS canon to learn about the limitations of hill-climbing as an optimization strategy. But on the other hand, I do understand; the power of just-so neoliberal narrative is immense, filling your mind with pat explanations, cooling off your brain into a poorly annealed solid mass.

The funny thing about corporate determinism that it's not even true. Folks who say this have rarely run companies, otherwise they should know better. Loads of corporate decisions are made with a most tenuous link on profitability, and some that probably even go against the profit interest. It's always easy to go in a known-profitable direction, but that doesn't mean it's the only way to go, nor that all the profitable directions are known.

Sometimes this question is framed in the language of "what MyDesignCo really cares about is good design; we're worried about how this measure might affect our output". I respect this question more, because it's more materialist (you can actually answer the question!), but I disagree with the premise. I don't think any company really cares about the product in a significant way. Take the design company as an example. What do you want on your tombstone: "She made good advertisements"??? Don't get me wrong, I like my craft, and I enjoy practicing it with my colleagues. But if on my tombstone they wrote "He worked for justice", and also if there were a heaven, I would be p OK with that. What I'm saying is, you start a company, you have an initial idea, you pivot, whatever, it doesn't matter in the end. What matters is you relationship with life on the planet, and that is the criteria you should use to evaluate what you do.

Beyond all that -- it's amazing how much wrong you can wrap up in a snarky hacker news one-liner -- beyond all that, the concern begs the question by assuming that a flat-wage arrangement is less profitable. People will mention any down-side they can but never an up-side.

possible flat-wage up-sides from a corporate perspective

With that in mind, let's consider some ways that a flat wage can actually improve the commercial fate of a company.

A company with a flat wage already has a marketing point that they can use to attract people that care about this sort of thing. It can make your company stand out from the crowd and attract good people.

The people you attract will know you're doing the flat-wage thing, and so will be predisposed to want to work together. This can increase productivity. It also eliminates some material sources of conflict between different roles in an organization. You would still need "human resources" people but they would need to spend less time on mitigating the natural money-based conflicts that exist in other organizations.

Another positive side relates to the ability of the company to make collective sacrifices. For example a company that is going through harder times can collectively decide not to raise wages or even to lower them, rather than fire people. Obviously this outcome depends on the degree to which people feel responsible for the organization, which is incomplete without a feeling of collective self-management as in a cooperative, but even in a hierarchical organization these effects can be felt.

Incidentally a feeling of "investment" in the organization is another plus. When you work in a company in which compensation depends on random factors that you can't see, you always wonder if you're being cheated out of your true value. If everyone is being paid the same you know that everyone's interest in improving company revenue is aligned with their own salary interest -- you can't gain by screwing someone else over.

limitations of a flat wage at improving justice

All that said, paying all workers/partners/employees the same hourly wage is not a panacea for justice. It won't dismantle patriarchy overnight. It won't stop domestic violence, and it won't stop the cops from killing people of color. It won't stop microagressions or harassment in the workplace, and in some ways if there are feelings of resentment, it could even exacerbate them. It won't arrest attrition of marginalized people from the tech industry, and it won't fix hiring. Enacting the policy in a company won't fix the industry as a whole, even if all companies enacted it, as you would still have different wages at different companies. It won't fix the situation outside of the tech industry; a particularly egregious example being that in almost all places, cleaning staff are hired via subcontracts and not as employees. And finally, it won't resolve class conflict at work: the owner still owns. There are still pressures on the owner to keep the whole balance sheet secret, even if the human resources side of things is transparent.

All that said, these are mainly ways in which an equal wage policy is incomplete. A step in the right direction, on a justice level, but incomplete. In practice though the objections you get will be less related to justice and more commercial in nature. Let's take a look at some of them.

commercial challenges to a flat wage

Having everyone paid the same makes it extraordinarily difficult to hire people that are used to being paid on commission, like sales people. Sales people drive Rolexes and wear Mercedes. It is very, very tough to hire good sales people on salary. At my work we have had some limited success hiring, and some success growing technical folks into sales roles, but this compensation package will hinder your efforts to build and/or keep your sales team.

On the other hand, having the same compensation between sales and engineering does eliminate some of the usual sales-vs-product conflicts of interest.

Another point it that if you institute a flat-wage policy, you will expect to lose some fraction of your highly-skilled workers, as many of these are more highly paid. There are again some mitigations but it's still a reality. Perhaps more perniciously, you will have greater difficulties hiring senior people: you literally can't get into a bidding war with a competitor over a potential hire.

On the flip side, a flat salary can make it difficult to hire more junior positions. There are many theories here but I think that a company is healthy when it has a mix of experiences, that senior folks and junior folks bring different things to the table. But if your flat wage is higher than the standard junior wage, then your potential junior hires are now competing against more senior people -- internally it will be hard to keep a balance between different experiences.

Indeed junior workers that you already have are now competing at their wage level with potential hires that might be more qualified in some way. An unscrupulous management could fire those junior staff members and replace them with more senior candidates. An equal wage policy does not solve internal class conflicts; you need to have equal ownership and some form of workplace democracy for that.

You could sort people into pay grades, but in many ways this would formalize injustice. Marginalized people are by definition not equally distributed across pay grades.

Having a flat wage also removes a standard form of motivation, that your wage is always rising as you get older. It could be that after 5 years in a job, maybe your wages went up because the company's revenues went up, but they're still the same as a new hire's -- how do you feel about that? It's a tough question. I think an ever-rising wage has a lot of negative aspects, including decreasing the employability of older workers, but it's deeply rooted in tech culture at least.

Another point is motivation of people within the same cadre. Some people are motivated by bonuses, by performing relatively well compared to their peers. This wouldn't be an option in an organization with a purely flat wage. Does it matter? I do not know.

work with me tho

As the prophet Pratchett said, "against one perfect moment, the centuries beat in vain". There are some definite advantages to a flat wage within a company: it's concrete, it can be immediately enacted, it solves some immediate problems in a local way. Its commercial impact is unclear, but the force of narrative can bowl over many concerns in that department: what's important is to do the right thing. Everybody knows that!

As far as implementation, I see three-and-a-half ways this could happen in a company.

The first is that equal pay could be a founding principle of the company. This was mostly the case in the company I work for (and operate, and co-own equally with the other 40 or so partners). I wasn't a founder of the company, and the precise set of principles and policies has changed over the 15 years of the company's life, but it's more obvious for this arrangement to continue from a beginning than to change from the normal pay situation.

The second is, the change could come from the top down. Some CEOs get random brain waves and this happens. In this case, the change is super-easy to make: you proclaim the thing and it's done. As a person who has had to deal with cash-flow and payroll and balance sheets, I can tell you that this considerably simplifies HR from a management perspective.

The third is via collective action. This only works if workers are able to organize and can be convinced to be interested in justice in this specific way. In some companies, a worker's body might simply be able to negotiate this with management -- e.g., we try it out for 6 months and see. In most others you'd probably need to unionize and strike.

Finally, if this practice were more wider-spread in a sector, it could be that it just becomes "best practice" in some way -- that company management could be shamed into doing it, or it could just be the way things are done.

fin

Many of these points are probably best enacted in the context of a worker-owned cooperative, where you can do away with the worker-owner conflict at the same time. But still, they are worth thinking of in a broader context, and worth evaluating in the degree to which they work for (or against) justice in the workplace. But enough blathering from me today :) Happy hacking!

18 responses

  1. John Cowan says:

    I think the result is that companies end up specializing in just one thing so they pay everyone the same, and then when a company needs something done outside its specialty, it hires another company to do it — essentially a guild system. That makes for pretty bad economic inefficiency: see Coase's theory of the firm.

  2. Ulya says:

    Hey, "idealistic and unrealistic" is what really matters!

    It's always painful to see how people try and fail to build paradise, but it's what life is all about.

  3. Charles says:

    With regards to the challenges of hiring and keeping sales people, Fog Creek started paying their sales team under the same compensation terms as the rest of their company. I don't know if they've made changes since the blog post below, but I thought I'd share the link anyway since it is refreshing to see people try new things and tell the rest of us what they've learned.

    http://blog.fogcreek.com/why-do-we-pay-sales-commissions/

  4. Peter says:

    I'm concerned that this scheme, if adopted widely, would cement in place structural inequality in society.

    For example, very high housing costs in the UK mean that someone whose parents are wealthy enough to provide them with a deposit for a mortgage on a house can have 2x to 3x the disposable income of someone, on the *same salary*, who is paying rent and attempting to save for a house.

    This has an escalator effect -- even where everyone is paid the same wage within a company, those from wealthy backgrounds get wealthier and those who are struggling continue to struggle. No matter how competent / hard working they are.

    Although I like the concept of flat salaries -- and the justifications are good, and I will mention it to our directors -- it's not an adequate substitute for redistributive policies at national level.

  5. wingo says:

    Good points, Peter! And thanks for the link, Charles; it's very interesting.

    John, you claim that this would be a negative policy without comparing the "economic efficiency" impacts that you assert to the impact of the policy on justice, which I think misses the entire point of the article. It begs the question of what is being measured and optimized. Furthermore I think your assertion is not true: the situation you describe is no different from the current day. Companies specialize already. Almost all companies subcontract cleaners, for example, or lawyers (unless the company is big enough), or accounting professionals, etc, and specialize at what they are good at.

  6. Arne Babenhauserheide says:

    Hi Peter,

    One answer to reduce existing inequality is to have a tax on property. It doesn’t matter if your parents can give you money, as long as their wealth gets gradually reduced via a tax on property.

  7. Jim says:

    @Wingo

    I think you're missing some elements to your counter. Yes there are companies which specialise, like cleaners. Now what happens is that these companies compete for the tender, the lower tender generally wins which means that at a flat rate all those cleaners will be paid less because the tender is worth less.

    It can cause wage depressions not increases - which is the opposite of what the article is trying to encourage.

  8. Djikstra says:

    Do you know who was the first person to come up with this theory in a slightly different setting?

    It was Karl Marx, with his theory of the Labor Market. I wonder what happened to the countries who followed his advice. Oh wait the don't exist anymore. Justice cannot be coercive, why people do not understand this is probably the biggest mystery of all time.

  9. Hayden Jones says:

    How are people so intelligent, and yet so fucking stupid?

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