What the Sony hack told us about wage secrecy, and why governments need to act on it
Max Mannweiler and Rebecka Oberg
Last year, the North Korean government hacked Sony Pictures Entertainment as a revenge for the film The Interview. A few days later, classified Sony information such as payroll data leaked online — and uncovered a huge wage gap between male and female employees.
Suddenly, the Oscar-winning and wildly popular actress Jennifer Lawrence discovered that she earned much less from American Hustle’s box office sales than her co-star Bradley Cooper. And Charlize Theron could see that she had earned $10 million less than Chris Hemsworth for The Huntsman — and could negotiate a better deal.
This shows two things: First, that wage discrimination is a persistent, society-wide problem. It is easy for large, opaque companies to get away with it, and hard for affected employees to discover it. Second, it shows that, if we want to end wage discrimination, governments need to step in and make salaries public. The North Korean government did a strong first move here. It is now time for our own governments to do their share.
Here are three reasons why no one else will make salaries public, and why it is high time governments showed the way:
1. Managers will not do it.
A few managers have actually started to make the employees’ salaries public, and are in that way helping to combat wage discrimination. But it is not likely that this will become a widespread thing, since managers benefit a lot from a lack of transparency. By keeping salaries secret, managers can avoid justifying their arbitrary salary decisions, can pay employees less than what they are worth, and don’t have to show anyone their own wages. We should therefore not expect the average manager to make salaries public anytime soon.
2. Employees will not do it.
Some employees have tried creative ways to make their salaries public — for example by sharing their wages under the hashtag #Talkpay. Yet, talking openly about salaries feels awkward for a lot of people. We find ourselves in a society where many feel more comfortable talking about their sex lives than about their salary slips. Also, talking openly about salaries may cause problems with ones’ employer. As Mrs. Lawrence puts it after her discovery, she didn’t ‘want to seem “difficult” or “spoiled”’.
3. Unions will not do it.
Even unions, ancient champions of workers’ rights, won’t tackle the issue head on. Organized labor has achieved historic improvements in the last 250 years, but its clout peaked a while ago. Today, soaring manufacturing, diversification of labor and fragmented forms of employment render action unlikely for two reasons: more and more unions advocate for special interest groups rather than societal change; and fewer and fewer people want to become members in the first place (American Unions have lost a quarter of their members since 1979). We should thus not expect unions to fight in favor of small, already underrepresented groups.
In the end, opaque salary structures contribute to wage inequality. They’re a textbook-example of information asymmetry, and they cheat employees out of adequate wages while disproportionately affecting disadvantaged groups.
However, neither employers, nor employees and trade unions are likely to do something about it. Facing this market failure, it is time for governments to intervene and make salaries public. They can do so either by publishing everybody’s short-version tax receipts (as is already the case in Scandinavian countries) or by demanding that companies disclose average salaries for its grades during negotiations (as the German government did last week).
Whatever route they choose, it’s time to act now. Unless, of course, one prefers to leave this task to Kim Jong-un.
