Navigating Compensation in the Era of Transparency
Six decades after the Equal Pay Act aimed to eliminate gender-based wage discrimination, women in America still earn just 82 cents for every dollar earned by men. For Black and Hispanic women, the gap is even wider at 70 cents and 65 cents, respectively.
New pay transparency laws emerging across the U.S. aim to finally remedy these persistent inequities by requiring employers to disclose salary information for open positions. With eight states now mandating public disclosure of pay ranges for job postings, experts say a new era of compensation transparency is dawning.
As more locales enact regulations for posting salaries and banning questions about pay history, companies must adapt their hiring and compensation practices. Employers who embrace transparency can gain an edge in recruiting, while those who resist risk fines, poor publicity and eroded trust.
Pay Gap Persists Despite Equal Pay Act
Though the 1963 Equal Pay Act made it illegal to pay women less than men for the same work, the gender wage gap has only narrowed by about 20 cents in 60 years. Remote workers face an even wider divide, with women earning 79 cents for every dollar men earn when both telecommute.
Over a 40-year career, the average woman stands to lose around $900,000 to the pay gap. Experts tie persistent inequities to tendencies for women to be less assertive in pay negotiations and reluctant to discuss salaries.
New Laws Seek to Empower Through Information
In response, in 2021, a wave of local and state laws was enacted requiring salary range disclosures on jobs when posted or upon request. Leading the effort was Colorado, the first state to mandate public posting of pay ranges, followed by seven more states. A dozen others are considering similar bills.
Proponents argue transparency gives applicants, especially women and minorities, vital data to better negotiate pay and ensure fair compensation. Surveys show over 80% of workers are more likely to apply when ranges are listed.
Wrestling with Wide Ranges
Yet some worry that loose requirements allow dubious salary ranges that render the laws ineffective. Ranges spanning as much as $90,000 to $900,000 have drawn viral scorn on social media.
While most employers aim to comply, noncompliance has led to fines of up to $10,000 per violation in Colorado. Moreover, experts urge resistant companies to consider the risk of eroding employee trust and branding.
Beyond Ranges: Building Fair Systems
Experts caution ranges alone cannot guarantee equity. True pay fairness requires systematically documenting legitimate reasons for differences. Employees must understand how roles, skills, and experience factor into compensation.
This culture shift around pay is largely driven by HR, but leadership must spearhead consistent messaging. Investing time in compensation frameworks can give companies a recruiting edge.
Objectively setting pay before negotiating helps prevent discrimination and build trust. Workers who grasp pay rationales are more loyal and engaged. Smaller employers unable to match high salaries can tout other perks like remote work-life balance.
Early Signs of Progress
Though limited, early research indicates that transparency positively impacts equity. Public sector jobs with openly available salaries show a much smaller gender pay gap than the private sector. The same holds true for union roles with pay transparency.
Multiple studies confirm disclosure laws significantly increase pay fairness and equality where implemented. While fears abound that transparency could spur turnover, most employers report more and better applicants after posting ranges.
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Copyright © 2024 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.
