A new pay transparency law recently went into effect in New York City, requiring employers—including many in the health care industry—to post pay ranges for their open positions. But some workers say the resulting postings are "completely useless."

Pay transparency laws go into effect in NYC

Pay transparency is becoming more common as states and cities across the United States enact laws requiring employers to post salary ranges in job postings. On Tuesday, New York City's own pay transparency law went into effect, making it the biggest job market in the country to have such a requirement.

Under NYC's law, businesses are required to post a "good faith salary range" for every job, promotion, or transfer opportunity. A "good faith" estimate is defined by the New York Commission on Human Rights, which enforces the law, as what an employer "honestly believes" they are willing to pay successful applicants.

According to the Wall Street Journal, supporters of pay transparency laws hope they will allow workers more freedom in pay negotiations and reduce pay disparities in different jobs, industries, and populations.

However, NYC's pay transparency law has so far gotten off to a rocky start, with some businesses posting salary ranges that span hundreds of thousands of dollars for certain jobs.

For example, a trauma surgeon at a major health system in the city could earn anywhere between $384,000 and $800,000 or more. Similarly, a radiologist at the same health system could earn between $260,000 or $525,000.

According to a spokesperson for the health system, experience, specialties, historical productivity, and other factors can influence the pay for a position. "Healthcare is under unique and persistent employment pressure due to the pandemic," the spokesperson said. "This can impact salaries and ranges."

How broad pay ranges may impact pay transparency

Daniel Zhao, lead economist for Glassdoor, said overly broad pay ranges are often not helpful to employees applying to new positions. "If the difference is over $100,000 or double, that starts to become wide enough that it's less useful," he said.

"It's just incredibly frustrating," said Hang Xu, a user-experience designer in New York who has seen salary ranges that span tens of thousands of dollars. "It's completely useless from a negotiation standpoint."

To address this issue, some members of the New York City Council, which passed the current pay transparency law, are considering introducing additional legislation to prevent companies from publishing overly broad pay ranges.

"It's important for us to get it right," said New York City Councilman Justin Brannan, who co-sponsored the current pay transparency legislation.

However, executives and compensation specialists say broad salary ranges may be necessary to account for differences in skills, experience, or other factors among job applicants. In addition, pay ranges may shift over time, especially if too few applicants are interested in a position or pay scales are adjusted internally.

In addition, some job seekers have noted that any pay information at all can be helpful, regardless of how wide the range.

"It is entirely possible that companies, as they get used to seeing the applicants' reactions to their ranges, make adjustments," said Helena Almeida, VP and managing counsel at Automatic Data Processing.

Christine Hendrickson, VP of strategic initiatives at Syndio, said that wide salary ranges are not "get-out-of-jail-free" cards for employers and will "spark a lot more conversations with candidates and employees."

"It's really a scenario almost like a Goldilocks," Hendrickson said. "The range can't be too big. It can't be too narrow. It can be too high, it can't be too low." (Francis/Cutter, Wall Street Journal, 11/7; Liu, CNBC, 11/3; Green et al., MSN, 11/4)