People often forget that the ethical standards in their field are just consensus guidelines. What matters, oftentimes, is not the specific standard, but whether or not a given actor is willing to abide by those standards. An unwillingness to abide by them in one field often signals a certain shadiness and lack of regard in other aspects of their relations with other actors in the field.
In the SF/F field, the standard is that you don't pay to submit your work, and magazines that charge reading fees are, rightly, laughed at.
That's not the standard in the field of literary fiction, though. There, a number of magazines charge $2-3 reading fees. And almost every journal runs some contest or another with a $20 entrance fee.
Coming, as I do, from the SF/F field this has always seemed unconscionable to me. Editors of literary journals justify their reading fees by saying that it takes time and money to read the constant influx of submissions that's coming in. The reading fee both cuts the number of submissions and pays for reading them. But, to me, that is the essence of their jobs. You read submissions so that you can get the good stuff. If you're throttling back on the influx of submissions, then you're reducing the amount of good stuff you get. To me, reading fees betray an essential lack of concern for the quality of the product you're putting out: their prioritize the editor's convenience over the quality of the output.
However, that's not how the field thinks. In the field, this is a normal practice. Being published in a journal that requires a reading fee (like The Missouri Review or Narrative) is seen as an honor. Winning contests that require $20 fees (like Glimmer Train or Zoetrope's contests) is seen as an honor.
There are still a number of magazines that don't charge reading fees. Usually the most highly-regarded journals don't charge, and the journals that are very low on the pecking order don't charge. It's the ones on the second tier (oftentimes university-sponsored publications) that tend to charge. And a writer could, conceivably, make a career by just submitting to these.
But, as far as I can tell, most people don't. Most people pay the fees.
It's absurd, since you have money flowing from the pockets of graduate students and adjuncts and into the pockets of large universities (The Harvard Review, for instance, charges a reading fee). But there's a good reason for this. It's the same reason why academic journals have such onerous requirements (when you place a paper in an academic journal, you actually assign them the copyright to it. From that point onwards, they own it).
It's because there's--in comparison to publishing in an SF/F magazine--there's much more at stake in publishing in a literary journal. If you have sufficient literary journal publications, then you can get a short story collection published. You can get an academic job. You can get tenure. You can earn $60-100k a year until the day you die, without any chance of being fired. If we were to value an academic job as a capital asset, it would be worth between one and two million dollars.
Commercial publishing has nothing that even approaches that kind of reward. How many million-dollar advances go out to unknown authors each year? Maybe one? And publishing in an SF/F magazine doesn't really help you land that advance. At most, it might get you a few tens of thousands of dollars more than you'd otherwise have gotten.
But every year around 50 poets and fiction writers will get tenure-track positions.
And that gives leverage to the journals: they're basically giving out lottery tickets.
So yeah, I pay to submit. And if you want to be a literary writer, then you should probably do it as well.