More states, including California and New York, are enacting pay transparency laws that require employers to publicly disclose salary ranges in job postings—a move that could allow workers to be more selective about the jobs they seek and impact how they negotiate pay, Ray Smith writes for the Wall Street Journal.

More states enact pay transparency laws

According to Smith, pay transparency is becoming more common as more states enact laws requiring employers to post salary ranges in job postings.

In Colorado, a law regarding pay transparency in job postings went in effect in 2021, and similar legislation is expected to be enacted in both California and New York. National job board platforms, including Indeed, report that more postings now include salary ranges, regardless of where the jobs are located.

These pay transparency efforts are "intended to boost pay equity and address gender and racial wage gaps by ensuring people doing the same jobs earn similar pay," Smith writes.

In 2017, a study from Pew Research Center found that 25% of women said they earned less than a man doing the same job, while 5% of men said the same about women. Similarly, a 2019 study of 1.8 million respondents from Payscale found that Black men earned 98 cents for every dollar earned by a white man with the same job and qualifications.

However, HR officers and compensation coaches caution that pay gaps may persist even with new pay transparency laws since disparities can still occur within jobs with wide salary ranges.

How these laws can help workers

According to compensation specialists and researchers, pay transparency can allow job seekers to be more targeted when looking for jobs and help them assess whether their current compensation is at market rate.

For example, a 2021 study from Payscale found that around two-thirds of job seekers believe they are being paid below market rate. However, of this group, 51% were actually paid at or above market value.

Alexandra Carter, director of the Mediation Clinic at Columbia Law School, said that salary disclosures can encourage employees to apply for and stay with certain jobs. In fact, a recent survey from people analytics firm Visier found that more than two-thirds of workers said they would switch jobs for an organization with greater pay transparency.

"Pay transparency will quickly become a market advantage for companies that implement it," Carter said.

According to Smith, many managers also feel posting salary information publicly is beneficial since it means the company and job candidates are more likely to be on the same page when it comes to pay, saving them time during the hiring process.

David Buckmaster, who helped design compensation structures at Nike and Starbucks, said, "The good thing about pay-range transparency laws is that it sets an absolute floor for candidates, so people won't be totally in the dark about a company's pay practices."

Buckmaster added that prospective employees could also try to negotiate higher pay outside of a job's posted salary range since many companies only post their pay range minimums to comply with transparency laws. However, he noted that "[a]nything more than 10% above max will be a tough sell," and candidates will need to demonstrate skills above a typical candidate to advocate for an increase in pay.

Ben Cook, CEO of Riva, a startup that coaches workers on how to negotiate compensation, said that job seekers should do more research about salary ranges instead of just taking them at face value since inflation is raising costs and affecting people's pay needs.

For example, Cook recently helped a client negotiate a 10% pay raise after he realized that the pay range for the job he had accepted had been set in January and could not keep up with the cost of living, which had risen significantly over the months. To justify his client's request for higher pay, Cook had him cite several competitors who had recently posting job openings with higher salaries. (Smith, Wall Street Journal, 10/9)