When Everyone Knows How Much Everyone Else Is Paid

For companies that decide to make salaries public, internal efforts to close the gender gap aren’t far off.

Claire Hobean, operations manager for Re-Time, models the Re-Timer during the 2013 Consumer Electronics Show (CES) in Las Vegas. (Steve Marcus / Reuters)

One idea for eliminating America’s gender-wage disparity is to have formal reviews of a company’s entire payroll. The thinking is that if employers did an internal audit analyzing their pay data by gender, they’d be able to see a gender gap—which would compel them to take action.

That’s what happened at the company Salesforce last year, when the company did an internal audit and subsequently spent $3 million on adjusting pay. It’s also the aspiration of new equal-pay rules from the Equal Employment Opportunity Commission, under which companies with 100 employees or more must report payroll data to the federal government, broken down by race, gender, and ethnicity.

One company’s policies take all this a step further, cutting out the existence of any sort of external or formal review: Buffer, a tech startup, already provides a list—available to the public—of its whole staff and how much money each employee makes. The company recently analyzed its pay data to see if there’s a gender gap. “We often are asked ... how our transparent pay affects the gender wage gap,” explains Courtney Seiter, who is in charge of Buffer’s diversity efforts.

Buffer’s internal analysis found a median salary of $92,698 for their employees, with the median for men (including its founders) at $95,631 and for women at $86,423. That means Buffer’s women are earning 90 cents for every dollar the men earn. That’s roughly half of the national gender gap. It’s worth noting that the gender pay gap is noticeably smaller for women in tech generally, and that Buffer’s gap is close to the gap Claudia Goldin, a leading researcher on women and work at Harvard University, found for tech workers in the U.S.

“We had a slight feeling that transparency was an inoculation from any possible gender wage gap, so it was very illuminating to look at the data and see that there are some areas where we can improve,” said Seiter. Buffer’s plan for closing the gap consists of two initiatives. First it plans to hire more female developers, as the audit found that employees on the development arm of the company are paid more.

The other area Buffer identified as being important in closing the gender gap is experience level: Since Buffer’s salary formula takes years at the company into account (a loyalty bonus that compounds over time), it’s an area where women are at a distinct disadvantage. “We did develop in a way that's a little bit top heavy with—sort of what you would traditionally find in a Silicon Valley startup,” says Seiter. “Our first 20 hires were a large majority white men.” She adds, “We're now at a place where we can be very deliberate about growth and really go that extra distance to find members of diverse groups and people who are good for Buffer.”

The experience-level gap is something Buffer, and Silicon Valley generally, will have to reckon with. The company plans on creating explicit criteria for advancement so that employees can understand how they can reach higher a “experience level” and get higher pay. The company’s previous approach—allowing leaders to “emerge”—favored those who were bold enough to ask for a higher-up job, and it thinks that reforming this system will help women at the company achieve higher pay, relative to men.

Buffer’s study has mixed messages regarding the fight for how to achieve equal pay for women. On the one hand, transparency encourages companies to take a hard look at whether they are paying their employees fairly—which was why Buffer got into it in the first place. But on the other, making pay transparent is not enough. It’s what companies do based on that information that counts.