Welcome to the Era of Pay Transparency

A new pay transparency law has been in effect since November 1 in New York City, poised to help millions of workers across the nation earn more money.

The Big Apple just took a BIG step.

As of November 1, 2022, almost all employers in New York City must now list a salary range on all job ads, promotions, and transfer opportunities. The law applies to any job that can be done completely or partially in the city — whether in an office, out in the field, or from home.

While this law applies specifically to workers in New York City, its impact is already rippling out, with employers beginning to list pay ranges for jobs nationwide. Suppose a company has any plans to allow work to be done remotely. In that case, it makes sense for them to publicize pay ranges on all jobs because the NYC law also applies to non-NYC organizations that want to post job ads for work that could be done remotely from anywhere in the United States, as long as that includes New York City. Citigroup and Macy’s have already started doing so, and a growing list of companies like Google, IBM, American Express, and more have shared that they plan to do the same. As of mid-November, 60% of job listings in NYC have posted salary ranges, according to Glassdoor. By January, many more businesses will comply because those that do not will be reported to city agencies with 30 days to fix their job postings. Otherwise, they can be fined up to $250,000 per violation. New York isn’t the first place to roll out such a regulation. Colorado has helped lead the pay transparency charge. They have had a similar law to the one recently passed in NYC since January 2021, which requires companies to post a salary band for any job that could be done from Colorado, which includes folks working remotely from the state for a business based elsewhere in the country. Some companies have tried to skirt compliance with this law by barring Colorado residents from applying. But economic experts concur that this is far less likely for the New York City talent pool, which has some 4 million private sector workers. Colorado, in comparison, has a labor force of about 3.2 million in the entire state.

Pay transparency may soon become the norm, not the exception, in the United States.

Pay transparency laws are sweeping the nation and are likely to keep gaining ground. Starting January 2023, states including California, Washington, and Rhode Island will similarly require companies to list salary ranges in job postings. While some workers fret that laws in these states won’t apply to them, it is clear that these actions will put pressure on other states. Forward-thinking businesses are starting to work on this before it officially becomes a legal requirement.

New York City’s pay transparency law may help workers from Oregon to Texas to Delaware and beyond better prepare for salary negotiations because they can get a benchmark for their actual market rate. In the age of working from home and digital nomadism, some companies are doing away with location-based pay, which means that their NYC salary range may become what they offer everywhere. But at the very least, seeing what an NYC company is paying for a particular role can be a jumping off point to figuring out what you should earn in your market. Employers are quickly adjusting to this new norm, raising wages to attract top talent in this competitive market.

Pay transparency is an essential tool for closing gender, racial, and other minorities pay gaps

Historically underpaid groups, like women and people of color, stand to benefit the most from these new laws. Proponents of pay transparency legislation say that it helps remedy pay gaps in individual companies by highlighting how dramatic the pay disparities might be. The picture is still quite stark. Women who work full-time in the USA still only earn $0.83 to every dollar a man makes — a figure that nosedives when you look at the pay disparity for Black and Latina women, who earn considerably less than white women due to the compounded impact of racism and sexism. According to the U.S. Census Bureau, Black women are paid $0.58 for every dollar a white man makes. CNBC reported that “in 2021, Latinas working full time were paid approximately $0.57 for every dollar earned by white, non-Hispanic men, the National Women’s Law Center reports — when part-time workers are included in the comparison, Latinas only made 54 cents for every dollar paid to white, non-Hispanic men.”

Over the last several decades, mounting evidence points to pay transparency being an essential tool in closing gender and racial pay gaps. Posting salary ranges can help create more equity around pay. However, it may not be able to prevent women and minorities from being offered salaries at the bottom-of-the-range—while other candidates, like white men, negotiate top-of-the-range salaries.

The wide-ranging impact of pay opacity

The sad truth is that historically, companies have been able to offer certain groups of employees, like women — and especially women of color — lower salaries than are typically offered to white men. Research indicates that women and people of color tend to ask for less money, which published salary ranges can now help remedy.

In many countries, including the United States, pay opacity has been a core tenet of the job market and has traditionally benefited employers rather than employees. It’s enabled organizations to keep compensation rates flat even in the face of mounting inflation. Or when market rates for talent have risen, workers have not had reliable reference points to assess whether they are being paid fairly.

A culture of salary secrecy has benefited companies that have been able to keep wages lower, but things are changing. The last few years have significantly shifted the dynamics of the job market. Low unemployment and labor shortages across many industries have likely contributed to this push for greater transparency. Workers feel more empowered to speak up, while businesses have had to work harder to attract top talent.

Pay transparency laws help make hiring and applying for jobs more efficient

Pay transparency also helps eliminate information asymmetries, where a prospective employee’s expectations for pay differ vastly from an employer’s, helping make hiring more efficient for job hunters and employers alike. If salary expectations are too far apart, it’s now easy to disengage from opportunities that are not in alignment.

In the short-term, increased pay transparency may lead to higher turnover as workers see that their skills are worth more than what they’re currently paid, emboldening those who discover they are underpaid to head towards greener pastures. But in the long run, a less-opaque job market will lead to greater stability because retention rates will rise, benefitting workers and companies alike. Soon, almost 25% of Americans will live in a state with some pay transparency legislation. If companies are not providing salary band information to potential and current employees who will come to expect this data, they will wonder what these organizations are trying to hide. These laws may have started a transparency revolution in the employment market.

About the author.

An award-winning creator and digital health, wellness, and lifestyle content strategist—Karina writes, produces, and edits compelling content across multiple platforms—including articles, video, interactive tools, and documentary film. Her work has been featured on MSN Lifestyle, Apartment Therapy, Goop, Psycom, Yahoo News, Pregnancy & Newborn, Eat This Not That, thirdAGE, and Remedy Health Media digital properties and has spanned insight pieces on psychedelic toad medicine to forecasting the future of work to why sustainability needs to become more sustainable.