Pay transparency policies, where businesses actively share the salary range on an open job, are becoming the norm.
A majority, 60%, of companies now share pay ranges in job ads as of Payscale’s latest report on compensation best practices, which surveyed more than 5,700 business leaders and HR pros in late 2023. That share is up by 15% from the previous year and includes 21% of employers who say they list salaries because it’s required by law, and another 39% who do so regardless of any local or state-wide legislation.
Ten states have passed pay range transparency laws: California, Colorado, Connecticut, Hawaii, Illinois, Massachusetts, New York, Nevada, Rhode Island and Washington. Other towns and municipalities, including Washington, D.C.; Cincinnati, Ohio and Toledo, Ohio have salary range laws on the books, too.
Still, 13% of businesses say they’re actively resisting pay transparency — up slightly from the previous year. Businesses say they don’t want to follow new laws because putting systems in place to standardize and publicize their pay structure is too expensive, or because they don’t want competitors to know how much they pay, Lulu Seikaly, senior employment counsel at Payscale, said during a briefing with reporters.
Some companies may fail to fully comply with new laws by posting ranges that are too wide to be helpful, or they may resist posting remote jobs that can be done from a state that does require pay transparency.
Resistance to salary transparency doesn’t go over well, Seikaly says.
A separate 2023 Payscale report finds that workers who don’t feel their employer is transparent about pay are more likely to look for a new job.
Anecdotally, pay transparency boosts morale, “and for companies that don’t do it, you can tell from their from their internal organizations” through employee engagement and turnover, Seikaly says.
Payscale experts say employers now bound by pay transparency laws are seeing their workforce engage in the topic. Some 27% say employees have been asking more questions about their pay.
It’s empowered workers, too: 14% of business leaders say employees have left because they saw job postings with higher pay elsewhere, and 11% have seen a job posting within the organization and realized they were being paid less for a similar job.
More than 1 in 4 workers lives in a place where they’re entitled to see the pay range for a role in the job listing.
Business leaders say compensation is their top challenge of 2024, with half saying it’s a high-priority investment area in the coming year, closely followed by recruitment and retention.
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