What happens when women know how much other women make

Asking for a raise: Women vs. men
Asking for a raise: Women vs. men

We've all heard of the gender pay gap.

Women, on average, earn around 80 cents for every dollar a man makes. The gap is even wider for African American and Hispanic women.

But research shows that one way to address the problem is to end the mystery around how much people make.

"If you don't know how much your co-workers are earning and it's a taboo subject for most individuals to bring up, it's very difficult for you to figure out whether you're being paid fairly," says University of Baltimore law professor Nancy Modessit. "And if you know what you're being paid and what your coworkers are being paid, it allows the conversation to at least begin."

In August, the Trump administration halted an Obama-era proposal for pay transparency. The proposed policy would have asked companies with more than 100 employees to collect data on how much they pay people -- of all races and genders. In a memo to the Equal Employment Opportunity Commission, the Office of Management and Budget said the Trump administration had decided not to go forward with the policy because such data collection is "burdensome."

But studies show that pay transparency can lead to happier employees and greater collaboration in the workplace.

Related: How to research company culture -- before you take the job

As a young woman early on in her career, it didn't occur to Darcy Peters to negotiate her salary. When a construction firm offered her $40,000 to be an administrative assistant, she recalls thinking, "Anything is cool."

But later, her enthusiasm dimmed. She constantly compared herself to a female colleague on the same level.

"I was always thinking 'Is she getting paid more than me? Is she a better negotiator?'"

But in Peters's current job, she says that salary anxiety is a thing of the past — because at her company, everyone knows what everyone else makes.

Peters is a customer advocate lead at Buffer, a social media management company that practices pay transparency, which means it makes all salaries available to all employees.

Companies like Whole Foods and Crowdfunder have also adopted the trend of sharing employee salaries.

At others, employees are taking matters into their own hands.

A spreadsheet recently obtained by the New York Times shared amongst 1,200 Google employees showed that women made less than men at most job levels.

While many U.S. workers once feared retaliation for talking about pay, there are now a handful of laws that forbid some employers from punishing workers who share pay or ask about pay.

Related: I told a dude how much I made. It changed my life

At Buffer, a public spreadsheet publishes salaries for anyone to see, and the company even shares the formula it uses to calculate salaries, adjusting for factors like location, years of experience and loyalty.

Peters says she now makes $94,576, with money added for her dependents and her one year with the company.

"My two peers are both male, and just knowing that we're on the same playing field and not having to wonder 'Are they getting paid more because they're better negotiators than I am?' -- it's great," she says.

Modessit says that while she's encouraged by some companies adopting such a radically open attitude, the Trump administration's move has set pay transparency on "a slower path."

"One thing that to me is so tragic about rescinding the EEOC's rule on providing data is that when it becomes the norm for large companies to disclose that information, they then have to deal with the information," she says.

"Now they're not going to have to collect it, so they can ignore the problem."

Personal Finance


CNNMoney Sponsors