No one rents an apartment or buys jeans online without knowing the price. Soon, many Americans won’t be looking for a job without knowing how much it will pay.
A series of newly adopted local and state laws that will go into effect soon will force companies to disclose how much the job will pay when posting open jobs. The purpose of these laws, besides being common sense, is to reduce the persistent pay gap that separates white men from women and people of color. Narrowing the pay gap is an important step forward for equality in America, affecting everything from the quality of life Americans have to the way they see themselves. But while wage transparency is a much-needed improvement, more is needed to bring true balance to all Americans.
In the United States, women and people of color are paid less than white men, regardless of job or experience. The pay gap often starts at the beginning of a career and worsens throughout life as women and people of color are less likely to get raises. Various other factors contribute to this gap. For example, a mother who takes time off from paid work to care for a child is paid nearly 40% less than a woman who does not. There is occupational segregation where jobs occupied primarily by women and people of color, such as home health care aides and food service workers, are paid less. It went up as more men.) It’s also true that women and people of color are significantly underrepresented in the highest-paid managerial positions. That means the median hourly wage for a woman is 86 cents for every dollar her man makes. A black woman earns 68 cents a year. Over the past three decades, little progress has been made towards closing the pay gap.
Step into this new spate of wage transparency laws.
“Transparency is one of the key tools we’ve identified for closing the pay gap,” Andrea Johnson, director of state policy at the National Women’s Law Center, told Recode. “This is absolutely critical to increasing both worker power and employer accountability.”
Some of the new pay transparency laws protect workers’ right to discuss wages without retaliation, while others go further. In recent years, from Connecticut to Hawaii, laws banning employers from asking candidates for their salary history make it impossible for past pay gaps to know what they’ll earn at their next job. Most promising is a law that requires employers to post wage ranges for jobs when they first start recruiting. One such law came into effect in Colorado in his 2021. New York City laws will come into effect in November, and California and Washington laws will come into effect in January. The governor of New York will soon sign a statewide law of this kind that will take effect next year.
By disclosing salary ranges, implicit bias is less likely to creep into new salaries. This is because it changes the need for salary negotiations that usually have unfavorable outcomes for women and people of color. For example, if a woman asks for a raise (women get a raise just like men), it simply makes it less likely.
“By eliminating bargaining or reducing the role of individual bargainers, compensation settings tend to be more equal,” Ariane Hegewish, a senior fellow at the Institute for Women’s Policy, told Recode.
The very act of setting salary ranges for positions forces companies to assess their compensation practices and, potentially, to redress disparities among existing employees. Finally, pay transparency for new roles allows people already employed to bargain for better wages when they earn less than others in similar positions. Relying on workers to identify and negotiate is clearly imperfect, but it certainly helps.
“It’s pretty simple. The more data you have, the more talented people know their worth,” says Hired, a recruiting platform that publishes its annual survey of pay gaps in the tech industry. said Josh Brenner, CEO of The company’s software also notifies employers if it detects any bias in salary offers (Hired says this nudge gives about a 5% chance of updating salary offers and offers are 11% higher on average).
Research on the impact of wage range laws is new and therefore limited, but experts say pay gaps are much smaller in public sector and union jobs, where salaries are more transparent and controlled. .
For transparency efforts to be successful, they must not be overly broad and companies must be aggressively penalized for not following wage transparency rules. A study of Colorado’s new Payroll Transparency Act found that while the percentage of job postings containing salary information has increased by 30% since the law went into effect in 2021, it has become more common over time. A lot of compliance is expected. According to data shared by compensation software company Payscale, an employee who works at a company with pay transparency is 7% more likely than an employee with the same job and qualifications at a company without transparency. I earn a lot.
These laws are currently set at the city and state level, but their impact could extend beyond local governments, influencing businesses to voluntarily share payroll information. there is. Whether this is to simplify job postings or attract talent in a tight job market.
“About half of our clients say they have to post for legal purposes,” said Lulu Seikaly, senior attorney at Payscale, referring to inquiries from the company about setting payment ranges. I think you came to us without any requirements,” he said. “They know states like California, Washington, New York and Colorado are being forced to post salary ranges.
Other strategies to close the pay gap
Extending these wage transparency laws to existing positions and more companies in more states, not just new job listings, would be even more effective. But wage transparency alone cannot fully bridge the wage gap.
“There’s no silver bullet,” said Ellis Gould, senior economist at the Economic Policy Institute. “But I think wage transparency will steer us in the right direction.”
Experts interviewed by Recode for this article expect pay transparency laws to ensure a narrowing of the pay gap, but that’s why women and people of color suddenly have truly equal pay. I don’t think it means that As we know the pay gap is caused by many issues, so solving it will require different tactics. Here are some.
By going one step further and making that data public, we can do more than wait for companies to close the pay gap. In addition, better funding for EEOCs would make them better able to deal with the wage discrimination complaints they deal with.
raise the minimum wage: One reason for the pay gap is that women and people of color are overrepresented in minimum wage industries. So raising the federal minimum wage, which has been stagnant at $7.25 since 2009, would disproportionately help women and people of color and go a long way toward narrowing the pay gap.
Affordable and quality childcare: America is experiencing a childcare crisis that is severely impacting the career prospects of women with increasing childcare burdens. Without proper childcare, women will continue to be pushed out of the workforce and wages will continue to decline. The sector needs more government investment to improve the personal and working lives of women.
make it easier to form a union: Unions are helping to streamline wage bands and narrow the pay gap, but they are very difficult to form in the United States. Passing the stalled PRO bill in the Senate after passing the House will ease the unionization process, and more unions means more pay equity.
Of course, all this is easier said than done, and it will take a long time before the pay gap disappears. But new transparency legislation shows progress is possible, and more change is on the horizon.