You wouldn’t put an application in to rent an apartment if you didn’t know how much it was going to cost each month, so why do we apply for jobs and not know what they pay?
Because salaries have been a closely guarded secret for years, in companies of all sizes. They’re kept hidden from external candidates who apply for roles in an organization, keeping them in the dark about possible compensation. And they’ve always been highly confidential within a company, to prevent employees from discovering that the person sitting next to them might make more than they do.
Even in a job interview, the subject of salary can be a hard one to broach, with the question of remuneration often left until the very end. But that’s all about to change…
New series of laws
Enter a new series of local and state laws, which will force companies to divulge what a job pays when posting an open position – a move that is expected to reshape workplaces and the way they hire.
New York City’s pay transparency law came into full effect on November 1st, 2022, meaning any private-sector company with four or more employees, and at least one employee working in the city must include a “good faith” salary range for all job listings. Companies that fail to comply with the law could face penalties up to $250,000 per violation.
And come the start of next year, salary transparency laws take effect in California and the state of Washington, with similar laws already in effect in Colorado, Connecticut and Maryland. A bill sponsored by House Rep. Eleanor Homes Norton (D-D.C.), if passed, would make pay transparency federal law.
The reason for these laws? The logic of making compensation transparent is that it becomes harder to pay people unfairly when salaries are open to public scrutiny. Done correctly, it could narrow the persistent gender pay gap.
Currently, the median hourly wage for women is 86 cents per hour for every dollar a man makes. Black women make 68 cents. And there’s been very little progress on closing this gap in the last 30 years.
Will it work? While there is much debate, with some arguing it will cause more problems and solutions, and with research on the effects of pay range laws still new and fairly limited, experts point to the much smaller pay gaps in the public sector and at union jobs, where salaries are most transparent.
Also, in a study conducted by the University of Utah’s business school, it showed that the gender pay gap was reduced by up to 45% in transparent organizations compared to those that didn’t disclose the data.
So, how can you use these new laws to your advantage? Could this be an opportunity to get a raise at your current job, or apply for a new position with a better salary? Of course, there are still flaws and loopholes in the system, with some companies offering huge pay bands, ranging from $158,400 to $434,000 for one role – PricewaterhouseCoopers LLP, we’re looking at you.
And while there’s no doubt that salary transparency isn’t a panacea, it may go some way to leveling the playing field once and for all.
It’s worth noting, if you love your job and you see your role or a similar one listed with a salary range higher than your current earnings, discuss it with your manager and ask if you might be considered for a raise or promotion. Alternatively, you can use sample salaries from similar roles at other firms as a bargaining tool.
And if you’re about to hit the interview circuit looking for a new role, use listed salary ranges as a jumping off point for negotiation, as well as published salary ranges at competitors to make your case.
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