Embracing pay transparency to drive pay equity

Pay transparency laws – laws requiring an employer to provide pay ranges for open roles, either in the job posting or through direct communication with candidates – are now on the books in ten states, with more likely on the way.

Chiefly, pay transparency laws aim to reduce pay inequity and close the gender pay gap. Armed with accurate information about what an employer is willing to pay for a position, job seekers can avoid lowballing themselves and perpetuating past pay discrimination in salary discussions with prospective employers. When pay ranges appear in job postings (or when employers share them with current employees, as some states require), employees can compare their compensation against the provided range, potentially highlighting disparities and prompting underpaid employees to ask for a raise or seek work elsewhere.

This trend has shifted expectations among job seekers. While seeing a pay range in a job posting used to be a relative rarity, norms are changing rapidly, even in states that lack a pay transparency law. A 2023 survey by the Society for Human Resource Management (SHRM) found that 74% of US workers are less interested in applying to a job posting that does not list a pay range, and 73% are more likely to trust organizations that provide pay ranges in job postings.[1] Research by XpertHR found that candidate and employee expectations were bigger drivers of pay transparency initiatives than legal requirements.

Research supports the link between pay transparency and greater equity, with studies showing a measurable reduction in pay gaps along the lines of gender, ethnicity, sexual orientation and other characteristics when pay transparency is implemented.[2] Yet it is not a panacea, and the details of implementation matter. For example, an employer that posts a pay range too broad to be useful or allows individual negotiation to make its posted ranges meaningless is unlikely to see the gains in pay equity that transparency can produce.

Leave a Reply

Your email address will not be published. Required fields are marked *