Pay Transparency Is Here. Is the Price Right?
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Price is the determining factor in most important decisions. Whether it’s buying a house, a car, or enrolling in a specific institution of higher education, the price weighs heavily on buyers’ preferences and decisions.
Soon, that same basic logic will be applied to the job market as pay transparency becomes more widely adopted — whether by choice or by mandate.
A series of new local and state laws will force companies to disclose what a job pays when posting an open position. While some of these laws protect workers’ rights to discuss pay without retaliation, others also prevent employers from asking candidates about their salary histories.
The primary intent of these laws is to shrink the wage gap that has existed in perpetuity. In the U.S., women and people of color get paid less than white men for performing the same job duties.
Pay gaps often begin at the start of careers, then compound over a lifetime, as women and people of color are less likely to get raises. Part of the reason for the void is that these groups typically ask for less. They ask for less because they’ve been paid less, historically. The hope with these new laws is that visibility into what positions pay will give these populations a clearer picture of what to ask for from the start.
While California, Connecticut, Colorado, Maryland, Nevada, Rhode Island, and Washington are now (or soon will be) imposing pay range disclosures in job postings, many employers in other states have started listing pay information on job ads — with more likely to follow.
A recent survey found that 17% of companies already voluntarily list pay ranges, and another 62% of organizations are planning to do the same or are considering it.
“We’re approaching the point at which a job posting without pay will be like going through a supermarket and not seeing a price on your can of soup,” said Scott Moss, director of the Division of Labor and Statistics at the Colorado Department of Labor and Employment.
Show Me the Money
In what should come as a surprise to absolutely nobody, job seekers support pay transparency. So much so that 33% of job seekers said they would not even go to a job interview without first knowing the salary the employer is willing to offer. But it’s not just those actively looking for a new job who value more openness regarding salary information.
According to a 2022 survey by compensation software company Beqom, 60% of those surveyed would switch companies to one with more pay transparency. And more than a third of U.S. workers surveyed said their companies did not share gender pay gap data internally or externally — with 22% reporting they believed the divide had increased since last year.
Younger generations seem to be taking it upon themselves to be more transparent about their wages.
A shade under 42% of Generation Z workers and 40% of millennials have shared their salary with a coworker, compared with 31% of Gen Xers and only 19% of baby boomers, according to a Bankrate survey from March.
Why you should care: The pandemic put in motion some wholesale changes to what people want out of their professional lives. And while headline-making pilot programs for the four-day work week are underway, it appears that pay transparency is quietly catching on and will soon be the norm from coast-to-coast. HR professionals and anyone involved in communicating critical information to employees should start planning for the new age of financial disclosure.
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