Pay Transparency is the Law. Is It Being Broken?
Every rule has its loopholes, and when a new law comes into effect, part of the process is seeing how people follow it—and how they try to get around it.
A wave of new salary transparency laws rolled out throughout the US over the past few years. States including California, Colorado, New York, and Washington now require that every job posting list its expected pay range, while Connecticut, Maryland, and Rhode Island are among those requiring employers provide expected salary upon request.?
Advocates for the laws argue that greater transparency can help both employees and outsiders clock racial and gender-based pay gaps, in addition to helping workers make informed choices during the application process. The cynical point of view would be that employers want to hide their pay range from prospective candidates in order to have more leverage in negotiations, so when the laws took effect, we heard stories about how companies would post huge ranges in order to avoid any real disclosure in their job listings.?
It’s been a few years since the first of those laws came into effect. What does job posting data tell us about salary transparency now? And have advertised pay ranges grown??
Transparency made a big jump. Ranges made a small one.?
The short answer is good news. Generally speaking, the laws are working as intended.?
Lightcast job posting data show that salary transparency data in the US started to tick up in 2020 as the first of these laws came into effect, and saw a huge leap in 2023 as requirements for California, New York City, and Washington became active. About 15% of all US postings listed salary in 2022, and that more than doubled in 2023 to cover over 30% of all postings.
But what about the oversized pay ranges? The increase hasn’t been as big as we might have feared. We can understand their relative size by comparing the upper and lower estimates to the midpoint, which shows us that the size of ranges have also risen since 2020, but to a much lesser extent.?
Let’s dive in deeper.?
No state is seeing full compliance.
Colorado—whose law has been in effect longest—has the highest rate of salary transparency in job postings, followed by Washington and California.
New York state is lowest among this group, but its state law is the most recent. New York City passed a law before that, with dramatic results:
Only 16% of NYC jobs listed pay information before the law took effect, and that share shot up 40 percentage points to 56% immediately after. That number has continued to grow over the course of 2023 and early 2024, rising another 18%.?
That big jump is comparable to those seen in California and Washington, all of which happened at about the same time. Here’s a timeline of salary transparency over time in states with disclosure requirements:
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Nobody is seeing massive changes in pay range.
Despite the reports of unbelievable and unhelpful salary ranges, there’s little evidence to support this is a widespread trend. None of the states (or cities) that passed new laws have seen a huge increase in the gap between the average midpoint and the average extremes of advertised salaries. In fact, Colorado, Rhode Island, and Maryland have all seen a decrease in salary ranges.?
Again, we can look at New York City specifically to understand the nuances of how this is playing out in one market. Though there’s been some increase in average range since the transparency law went into effect, there was greater fluctuation before that, suggesting there’s little relationship between the two patterns.
Looking Ahead
By requiring businesses to put their cards on the table in job listings, salary transparency laws put workers in a stronger starting position. But these laws took effect during a time when workers are in a strong position anyway: employers need employees. In the coming years, job posting data will continue to be important as it shows us how these effects continue over time.
Since the labor market, and the economy overall, are so complex, any cause could have any number of effects. That’s always a risk. In this case, the potential of broad salary ranges or low compliance could have tanked the outcomes these laws set out to achieve. But looking at the data, that didn’t happen: salary transparency is up, with minimal side effects. Just like the laws say.?
We want to hear from you!
How has salary transparency affected your job search or working life? Has missing salary information or overly broad pay ranges ever discouraged you from applying for a position? Have disclosure requirements made you rethink the postings you’re hiring for? Let us know in the comments.
Special thanks to Cal McKeever for his outstanding data and storytelling work that contributed greatly to this edition.
Program Specialist III - MS Apprenticeship Program at MS Dept of Employment Security
8 个月Salary transparency would have saved me countless hours in my own job searches and as a hiring manager throughout the years. It is so helpful to know whether a job is worth applying for. When I was hiring for positions that could not pay more than $10/hr, why encourage people who were looking for (and had the experience to justify) $18/hr?
Talent Marketing Manager at Lightcast; Owner of Yay! Candy!, LLC
8 个月I’ve seen the giant range in the wild a couple of times; while rare, they are definitely attention-grabbing in the not good way. It’s surprising that those companies would choose the wide-range loophole at the cost of their employer brand, even to the point of looking like a scam.