With new laws from Colorado to Rhode Island, employers are under increasing pressure to publicly share how much a job makes.
Last week, California became the largest state to join the quest for pay transparency when Gov. Gavin Newsom signed into law the measure, which will take effect next year.
While it wasn’t the first country to require employers to post salary ranges for job openings, California is home to some of the world’s most valuable companies and some 19 million workers, so it has significant influence on workplace policy, observers say.
They expect more employers to start voluntarily disclosing salary information in a tight labor market.
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According to a recent survey of Willis Towers Watson executives, a growing number of employers are already including salary information in job advertisements in positions where it is not required by state or local law. The survey found that 17% of companies report salary ranges and 62% plan or are considering doing so.
“Culture change towards wage transparency”
“We’re definitely seeing a cultural shift towards pay transparency in American companies,” said Joanna Kim-Brunetti, chief legal officer and executive vice president of regulatory affairs at Trusaic, a workplace ownership software company.
And with more payroll data than ever available on sites like Glassdoor and Indeed, employers are increasing transparency and monitoring pay gaps, Kim-Brunetti said.
“The net result is forcing employers to focus more on pay equity to win the war for talent,” she said.
Fueled urge to disclose salaries: pay gaps
The pressure to disclose salary information is fueled by persistent wage differentials between women and people of color. Women make 83 cents for every dollar men make. For women of color, the gap is even greater.
A California study found that women in similar positions earned $46 billion less than men in 2020. People of color were paid $61 billion less than white workers.
Equality in salary negotiations
Pay transparency helps level the playing field, California first partner Jennifer Siebel Newsom told USA TODAY.
“It’s child’s play. It will help us close the pay gap for women and communities of color,” said Newsom, a filmmaker who founded the Representation Project, an organization that uses media to challenge gender stereotypes.
“Having this transparency at every step of employment, from hiring to promotion and through-out, will put more money in the pockets of women and communities of color, which given the gaps we have, not just in terms of society, only better is income inequality but wealth inequality in our country.”
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Pay transparency popular with job seekers, employees
Pay transparency is popular with job seekers and current employees alike. Current employees can review job postings to see if they are underpaid.
According to Willis Towers Watson, job seekers and current employees want to know that they have “equal opportunities to thrive and grow within the organization.”
In fact, workers are looking for employers that are transparent about their pay.
A survey of 1,000 full-time US workers by analytics firm Visor found that 79% prefer pay transparency. Almost as many – 68% – said they would switch jobs to join companies with more pay transparency, even if the pay was the same.
Pay transparency leads to greater job satisfaction, engagement and loyalty, according to a recent survey by jobs portal Indeed, which now highlights pay ranges when employers report them.
Disadvantages of payment transparency?
If you know what your colleagues are making, you’ll be in a better position to claim comparable pay. And as more salary information becomes readily available, employers will likely feel pressure to ensure pay is equal, or at least communicate better about it.
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But there are also disadvantages. For example, constantly comparing yourself to your peers can create excitement. When the University of California published salaries, research showed that people who felt underpaid had less job satisfaction and more turnover.
“Workers with salaries below the median for their wage unit and occupation report lower pay and job satisfaction, while those earning above the median do not report higher satisfaction,” the study found.