Vox ran a good article last week about the case for transparency when it comes to salaries.
It’s no secret that for the bottom 90% of Americans, wages have stayed basically flat for the past thirty or so years. And there is a lot of buzz these days about whether or not to raise the minimum wage. That certainly won’t solve the problem, but it’s a good start.
When you are running a company, you have to decide how you will set compensation across your organization. There are a couple of competing ideologies at play. Some say pay employees more, some say pay them less.
Here is the case for paying them more:
- Higher salaries leads to happier employees. High morale leads to increases in productivity. And increases in productivity should lead to more innovation, more growth, and more success.
- Employees spend less time looking around. When your employees are happy with their salary, they don’t spend nearly as much time looking for new opportunities. They become more dedicated to their current role.
- Attract top talent. When your company is offering higher wages than your competitors, you will end up hiring better workers.
- At a macro level, if all companies pay higher wages, consumers have more money to spend. A consumer-spending driven economy, like the one we have in the US, relies heavily on the spending of the middle class. When middle class workers earn more, they spend more, and the economy grows.
Tomorrow we will make the case for paying them less, in the interest of seeing both sides of this argument.