It was the typical chitchat that happens at dinner parties. One of the women at the table was talking about starting a service business. I’ve been a business owner and consultant, as well as a longtime business writer, so I immediately launched into how she could do the math on her rates and suggested what she might charge per hour.
The table got a little quiet, and someone changed the subject.
It’s not the first time that my openness about money and what contractors should charge, or employees should be paid, has made others uncomfortable. Freelance writers like me often share information about rates and contract terms. As downward pressure on rates has made it tougher to make a living as a soloist, questions like “what do they pay?” and “what’s the contract like?”–considered rude in polite company–are common queries among freelancers and gig workers.
Sometimes, that bleeds over into my personal life, and I’ve been accused of talking about money too much. More people should join me.
When to say what you pay (and are paid)
I’m not saying that you’ve got to load a digital file of your tax return onto your phone (not a great idea for a variety of reasons) or broadcast your annual salary to the world, but our collective reluctance to discuss money in various settings can hold us back. In my freelance circles, sharing pay data appropriately–for example, when it’s not in violation of a contract or putting your client relationships at risk–with trusted colleagues helps writers negotiate. The pay and overall compensation information others shared with me helped me understand when I was first starting out that it’s possible to earn a good living as an independent writer.
But, that openness doesn’t carry over to other areas of life. A February 2019 survey by Quicken found that 43% of people don’t even tell their spouses or partners what they earn.
In the workplace, lack of salary transparency contributes to gender and other pay gaps and biases. PayScale’s “2019 Compensation Best Practices Report” found that, while most employers want to be more transparent about pay, in reality, the needle isn’t moving toward greater information sharing. PayScale has a spectrum of transparency, ranging from sharing full compensation data with individuals (1) to providing pay scales to all employees (3) to providing ranges and specific employee pay information to all employees (5).
Lots of upsides, few downsides
“Pay transparency promotes trust and reaffirms a belief in the equitable treatment of people. Moving to a ‘say what you pay’ approach takes the leverage away from those professionals who may enjoy a high salary not because they are unusually skilled, but simply because they negotiated more aggressively than most,” says Selena Rezvani, vice president at Be Leaderly and author of Pushback: How Smart Women Ask―and Stand Up―for What They Want.
And while employers may be afraid of tough conversations as a result of salary transparency, it may also hold unexpected benefits for companies. In 2016, Fast Company wrote about another PayScale survey finding that two-thirds of U.S. employees who are paid the market rate for their positions believe they’re underpaid and were considering looking for higher-paying work. Because the companies weren’t transparent, employees just assumed that others were making more, which undermined their trust and loyalty.
Having more money talks
Beyond earnings, speaking more openly about money can be an enormous game changer for people who struggle with their finances. A 2018 report from Northwestern Mutual found that personal debt has risen to an average of $38,000 exclusive of home mortgages, up $1,000 over 2017.
That debt has a significant emotional cost. The same report found that money is the dominant source of stress–more than personal relationships or work. Four in 10 Americans experience “high” or “moderate” money anxiety and 28% say that financial anxiety makes them depressed at least once a month. However, a 2019 CreditCards.com poll found that roughly half (47%) of Americans are uncomfortable discussing their credit card debt. Financial illiteracy cost Americans an average of about $1,200 in 2018, according to the National Financial Educators Council.
What if we could let go of shame around money issues and talk about them? More people would find out that they’re not alone and shed the paralyzing shame that can come with struggling to make more money and/or get out of debt. Confidantes may find out that there are organizations that can help them and solutions to the financial issues that keep them up at night. Your best friend may have had to renegotiate their mortgage or benefited from financial counseling or debt consolidation.
There are many reasons that we should be more open about money–earning it, spending it, and managing it. Doing so could help us become more financially secure.