Will New Salary Transparency Laws Help Solve Pay Inequity?

New legislation around the country requires employers to disclose compensation at various points in the hiring process, which is prompting employers to take bigger steps in what many say is a crucial strategy in achieving greater pay equity for all.

Author: Jennifer N. Dienst       

hand holding paper with hand, dollar sign on it

In a survey conducted by job search engine Adzuna, one-third of respondents said they would not attend a job interview without first knowing the salary range.

On Nov. 1, New York City became the latest municipality to enact a salary transparency law, requiring employers advertising jobs in the city to provide “a good faith salary range for every job, promotion, and transfer opportunity.” On Jan. 1, 2023, a similar law will take effect in California, requiring companies with 15 or more employees to include pay details in both internal and external job listings as well as report pay details to the state.

The new legislation marks a growing trend toward salary transparency, one that is prompting employers to take bigger steps in what many say is a crucial strategy in achieving greater pay equity for all. According to HR Dive, 10 states plus numerous cities and counties now have laws or regulations on the books that require employers to disclose compensation at various points in the hiring process. Those regulations can vary, often significantly. A Connecticut statewide law requires employers to provide a pay range upon a candidate’s request or prior to an offer being made (whichever comes first), while Colorado’s Equal Pay for Equal Work Act requires employers to list compensation up front in job listings.

Many support the idea of increased salary transparency, seeing it as an essential step in closing the gap between, as pay expert Katie Donovan says, “the tallest, whitest dude” in the room and female and minority workers. “To be paid equitably, you want to earn what white men are earning. The median of everyone is less than the median of white men,” she said in a March 2022 bankrate.com survey.

According to a recent white paper on the topic from Adzuna, a job search engine, the U.S. ranked as the second worst, out of 19 total markets, for pay disclosure, with only one in 35 job ads including salary or salary-range information.

Job seekers are finding that some employers are using creative workarounds to skirt those new, stricter regulations, undermining the point of the legislation. In a Twitter thread started by writer Victoria M. Walker on Nov. 1 that has 12,700 likes at the time of this writing, she linked to several job listings in New York City with spectacularly broad salary ranges, commenting “I can already see that the ‘good faith’ part of the [NYC] law is going to be tested.”

In an online poll Convene conducted in October on LinkedIn, the vast majority of 229 respondents — nearly nine out of 10 — said they don’t work for an organization that makes salaries transparent. And a question raised by events specialist Brandi Kelley in the poll’s comments area underscored that not everyone is a fan of the idea: “The more important question is: Do you want to work for an organization that makes salaries transparent?” Naomi Clare Crellin, founder and CEO of Storycraft Lab, responded, “Salary ranges and increase expectations, yes. My actual salary?? Noooo….”

There also can be unexpected downsides to salary transparency, according to Zoe Cullen, an assistant professor of business administration at Harvard Business School. She recently told The Economist’s Money Talks podcast that when she looked at several studies on the topic, research showed that while policies that increase transparency generally helped to close the pay gap between men and women, overall wages fell by 2 percent. Cullen believes this is a result of firms anticipating increased salary negotiations with workers. “So an extra dollar [paid] to somebody means they also have to pay an extra dollar to many other employees,” she explained in the podcast, “and that incentivizes the employer to bargain quite aggressively, and it means the optimal wages that they’re setting are going to be lower, on average.”

RELATED: Salary Transparency: One Way to Combat Gender Pay Inequity

Still, according to Adzuna’s recent white paper on the topic, “more companies are putting vital salary information in their job ads since 2022. This could be driven by a cascade of major legislative changes initiated by some of the major states — New York, Washington, and California.”

In late October, Endless Events founder and #eventprofs community manager Will Curran started a free jobs board specifically for event professionals (jobs.eventprofscommunity.com) with the caveat that every job posted must include a salary range. Within the first week of launching, the site drew more than 1,000 applicants, and Curran has set the goal of listing 100 active jobs by the end of 2022, and at press time there was 31 active listings on the site. When Curran shared the site on his LinkedIn feed, some praised it specifically for including compensation details. “Thank you for creating this, and for the transparency on salary range!” posted Allison Pieter, founder and president of Cassis Productions.

“I think every other comment [on the site] is [about] the salary transparency; it has been the thing they love the most [about] it,” Curran said. One challenge specific to the events industry that Curran thinks stands in the way of more salary transparency is that many opportunities are contract roles, which can make sharing pay details more complicated — but not impossible.

“Some [employers] are like, ‘Oh, I’m paying by the hour, how can I do this?’” Curran said. The solution? He suggests showing an annualized version of the pay instead.

Jennifer N. Dienst is senior editor at Convene.

Coming to Convening Leaders 2023

In January at Convening Leaders 2023, a Convene Stage session “Does Salary Have to Be a Tightly Kept Secret?” will explore how salary transparency affects wage inequality (including a deeper dive into Convene’s latest Salary Survey). Register for Convening Leaders 23.

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