There is a discussion on the Chronicle Jobs blog about whether salaries should be disclosed at colleges and universities. I come down STRONGLY on the side of disclosing salaries, and, if you are on the job market for a job at a specific institution or working as a faculty member, researching/keeping up with salaries where you (want to) work. I have taken a lot of heat for my perspective in my real life, but I stand by it anyway.
Every year when the salary book comes out, I go and photocopy relevant sections. I think it is useful to have this information. Now, I have to say that I do not personally believe that a person's worth, or the worth of their work, is quantifiable, nor do I think it is represented by one's salary. I think this in the same way that I think scores on standardized tests don't really predict success. Just because I make less money or have a lower score doesn't mean that I am a less valuable contributor, a worse teacher, or a poorer administrator.
Now, if I made a great deal less than my colleagues, I might have a problem looking at the salary information. But you know what? I looked at the salary information for every job I took, and I negotiated a salary that put me close to or at the top of the range for those of my classification (Assistant/Associate) and years of experience... Knowing the salaries allowed me to negotiate from a position of strength. And I am happy with the salary I got intitially and where I am now. That said, I don't take some weird sort of pride in my salary--it is a means to an end, a way to pay the mortgage and other bills, and hopefully have some cash for vacations and other things. It doesn't mean anything about who I am.
I use the salaries of my colleagues to raise the bar for me. If someone else got a better raise, perhaps I need to write a little more! So far, each year I do what I need to do in terms of teaching, research, and service to get the raise that I deserve (back when we used to get raises). And I don't get too irritated when people are hired making more money than me--ultimately, it raises the bar for all of us.
I have to admit, though, that my attitude about the salaries may be the consequence of not feeling bound to a certain job or locality. I have not stayed at one job longer than 5 years (so far), and I am not shy about going on the market if the current job isn't working out. I would never pretend to hunt for a job just to get a counter-offer; the field is too small and professional relationships too important to alienate people by exploiting the search process. I have served on too many search committees to want to muck up someone else's search.
Perhaps the best reasons for transparency in salaries and, I would argue, raises are: (1) it reduces potential for abuse and discrimination, (2) it actually recognizes when someone is excelling in their work, and (3) it allows new hires and ongoing faculty to negotiate for a fairer salary.