Pay transparency—being open about employee salaries—is gaining ground across the U.S. Since 2018, nearly half of states, including New York, have passed or are considering laws requiring companies to share pay information. Supporters believe this could help reduce wage gaps, but it raises questions about how this openness might affect workplace relationships.

Some have argued that revealing salary differences could harm teamwork, especially if employees discover that others earn more. However, new research from Cornell’s SC Johnson College of Business suggests otherwise. The study found that people actually prefer to work with higher-paid colleagues—but only when they believe those colleagues are more skilled and can teach them something. Interestingly, when it comes to hiring, bosses tend to prefer candidates with lower pay histories than their own.

“There was a belief that people might want to be paid more than their teammates,” the researchers note, “but our results show the opposite.”

Selecting team mates

The researchers conducted four studies to see how salary affects partner selection. In one, economics PhD students were asked if they wanted to work alone or with a partner, and if they preferred a higher- or lower-paid teammate. A similar study was done with professionals, who were asked to choose between two project partners, Alex or Pat (both gender-neutral names). In both cases, participants initially preferred a higher-paid partner but were less interested once they learned the partners had the same skills.

Another study asked participants to name actual co-workers and indicate whether they would rather work with those who earned more or less than they did. Again, participants showed a preference for higher-paid colleagues, but only if they believed they could learn from them.

Why do people prefer higher-paid teammates? The researchers say that many assume higher pay means greater skill, and they expect to benefit from working alongside someone more experienced. “People see higher pay as a signal of expertise,” they explain.

But when participants were asked to play the role of hiring managers, the results changed. When given a choice between two candidates with equal skills but different salary histories, 71% chose the lower-paid candidate. That number rose to 83% when participants learned that the candidates had identical qualifications.

When discussing these findings with others outside the study, the researchers found that almost everyone had an opinion about whether they’d prefer a higher- or lower-paid teammate, often for different reasons. Even those who disliked the idea of knowing co-workers’ salaries—or having their own known—acknowledged that pay transparency is becoming more common.

“As teamwork and pay transparency continue to grow in importance,” the researchers conclude, “our findings reveal surprising effects that companies should consider.”