Employee Pay Rate: Why You Shouldn’t Chat About It

Many businesses have guidelines that disallow employees from discussing their pay rates with coworkers. The rules should also prevent managers from revealing their employees’ pay to workers. The only people who should know what an employee makes are the hiring manager, HR, and the IRS. It causes too many problems otherwise. For example, let’s say a company raises its standards and hires a new employee at an attractive rate.

It’s not the new employee’s fault she earns a higher pay rate than the veterans. It’s also not her fault if the veterans never chatted with the boss about raising their pay rates.

However, the disgruntled workers will likely take it out on the new employee. Maybe they’ll give her a hard time, do a little sabotaging, and tell her she’s not worth her pay. Perhaps, they’ll make the experience so hellish for that new worker that she seeks employment elsewhere.

Managers can avoid situations like that by keeping their subordinates’ personal information to themselves. They can also prevent such uproars and upsets if they pay everyone what they’re worth in the first place.

The problem isn’t that the workers aren’t worth their pay rates. We all work hard and deserve to earn enough to pay our bills. But some of the businesses don’t want to let go of the cash. Sometimes, hundreds of billions of dollars aren’t enough to satisfy the greed. But then they scratch their heads when the turnover skyrockets and customer service suffers.

  • “Why can’t we keep any workers?”
  • “Why don’t ‘they’ want to come to work?”
  • “Why are the rest of our workers burned out from working overtime?”

The amount of money spent on overtime alone is probably enough to even out everyone’s 40-hour check, new and old.

Let’s say the veterans at a small store make $10 an hour, and the company needs to hire more workers and make the pay rates more appealing.

If each of their six burned-out full-time workers earns time and a half for 20 hours every week (120 hrs.), they earn a total of $4,200 for all their hours combined.

That store can afford to hire three more full-time employees at $11.5/hr, jack up everyone else’s pay $1.50/hr and save a small amount of money, too! Or they could hire the new ones at $11 and kick the veterans up to $11.75.

pay rate

The pay increase isn’t that much with the small data I’m working with, but you see what I mean. There is a way to smooth things out a little bit.

In the above situation, no one would have to work overtime, and the veterans wouldn’t have to burn themselves out. This system would only be a problem if the veterans WANTED to work overtime and keep all the money to themselves. That’s a whole different issue, though. We’re talking about burned-out vets who have to work OT all the time because the store doesn’t have the staff.

An $11-$11.75/hr pay rate isn’t bad at all for someone who’s splitting their bills with a partner or not paying for any housing. So, new workers might stay longer, if they’re in one of those situations. That pay rate might not be appealing to a single person who has to handle all the bills alone because it simply isn’t enough to survive.

Since there’s only so much a potential employer can ask a candidate, they’d have to use a sophisticated vetting process to find applicants who will most likely stay.

good pay rate

The numbers can be played with on larger pay rates, too. This calculation was one example of filling a short-staffed store while saving the company pocket change. It doesn’t account for onboarding costs and such. I’m just pretending that I’m looking at data sheets and seeing a several-month-long pattern of overtime and low customer service ratings at one small location.

The loot would have to come from somewhere else in a situation that didn’t involve overtime. The profits would have to increase, or some back-end expenses would have to decrease. Many back-end things are tweakable, though. So, raising workers’ pay rates doesn’t always have to involve a monetary loss for the company.

But no front-of-the-house worker should have to deal with backlash from his or her peers over personal information like the pay rate. A job should only burden a new worker with normal service-related stress and the weight of learning and doing the assigned tasks. All those extras (hostile work environments, staffing issues, pay dissatisfaction, etc.) are HR-related issues.

Header image by Tumisu

Office workers image by mohamed_hassan

Handshake image by fauxels

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