Is The Salary Transparency Movement All It’s Cracked Up To Be?

As we discussed in a recent edition of Early Chirp, New York just became the latest state to mandate that employers include a salary range for any advertised open position. This so-called “salary transparency” movement aims to address uncertainty for job-seekers while reducing pay inequality along demographic lines.

But as more jurisdictions are implementing these disclosure requirements, some apparent shortcomings in the system are starting to become apparent.

Bad faith?

The fact is that many of these requirements don’t really have teeth, which means that companies refusing to abide by the spirit or letter of the law probably won’t face any real consequences.

As the New York mandate states, for example, businesses with four or more employees are only required to use the “good faith” standard in listing pay ranges for open positions.

While many employers appear to be doing the right thing, there are some glaring outliers. Sure, the viral posting that listed a salary range of “$0 to $2 million” has been taken down and blamed on an error — but there are others that are nearly as egregious.

An investigation found some positions that included ranges like $50,000 to $180,000 or $197,000 to $366,000.

Such broad chasms obviously don’t give applicants much information at all. But it could backfire, since research shows that companies offering a narrow range are more likely to attract more applicants.

Pay gaps

Another potential downside to salary disclosures is that they can reduce the likelihood of negotiations and ultimately lead to lower pay than employees might expect to receive otherwise.

Additionally, some studies show that transparency can reduce the gap between the highest- and lowest-paid workers. That might be great if you’re on the bottom end of the scale, but those at the top could become disillusioned and quit.

Chris Agee September 19th, 2023

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