You may have read that New York State and New York City recently joined several other states and municipalities in enacting salary transparency laws, requiring affected employers to include salaries when posting open positions.
The goal is to continue chipping away at discriminatory pay practices, by empowering workers with information. Now candidates who may have otherwise undervalued their worth will know the ballpark they’re playing in before answering salary questions or accepting offers.
The actual results of the law? At a guess, I’d say the goal will be at least partially met. Other positive consequences are also likely, including better worker mobility, and fewer interview games where everyone dances around pay issues.
Are there downsides? Yes, almost certainly. One is the likely increase of hiring outside of a posting process. Ample studies over the past 70-plus years already confirm that most available jobs aren’t posted at any given time. Some were posted earlier and are still available, although they are no longer being advertised. Some were never advertised and are being filled through other means. It’s easy to imagine that employers preferring not to announce their wages will expand their non-posting means of hiring.
In addition, most transparency laws don’t cover non-wage compensation such as bonuses, commissions, tuition reimbursement, and more. In other words, if two employees make the same salary, but one receives higher overall compensation, the company could still be in compliance.
Before getting angry with companies that skirt the issue this way, consider the conundrum known as pay compression. An employer may be compelled by the current market to offer more for a new worker than they have in the past. At the same time, they are retaining experienced workers in similar roles, whose pay is quite close to the entry-level salaries. By making this obvious in a posting, the employer risks losing the more seasoned workers, or may be forced to increase their pay as well.
Well, boo-hoo, you might be thinking. The boss should raise veteran workers’ salaries if new workers are making practically the same amount. Yes, that’s probably true, and perhaps that will happen. Unless the boss decides to lay off the seasoned workers instead, eliminating their salary expense altogether.
Of course that’s not fair; but that doesn’t mean it’s unlikely. The point is that these things are unpredictable, and laws enacted to remedy one situation sometimes create other problems. That’s not an argument against the attempt to even the playing field — it’s just an acknowledgment that these situations can be two-steps-forward, one-step-back.
Here’s something that happened early in my working life, when I was managing a law school’s off-site conference center. One day I was chasing a pencil that fell into the trash when I discovered a discarded pay stub. That’s how I learned that my office mate was making 50% more than I was, writing articles for the public relations department. No property management, staff supervision, finance or driving all over the place like I was doing. Just sitting at his desk writing. Grrr.
I’m still proud of my young self for taking the damning evidence to our supervisor for an explanation. Which I received: As a law student, my office mate was paid from the student worker budget, which was bigger. Sorry about that. And oh, no — there won’t be a raise coming for you. Sorry about that too.
These days an explanation like that could be reason to walk out the door, but context is everything. This was 1981, in the midst of what many consider to be the country’s worst post-WWII recession, the “great” recession of the past decade notwithstanding. Unemployment back then was over 10%, my federal student loan carried 9% interest, and mortgage rates were headed to 18%. Jobs weren’t growing on trees and I wasn’t about to stomp out in a huff. I couldn’t. I had reports to write before heading over to my second job serving food at a Vietnamese restaurant.
Is there a moral to this story, or advice for you to follow? Just this: Use the knowledge you gain about salaries carefully. If you are being treated inequitably, you may have to bide your time to rectify the situation. On the other hand, if you have more to bargain with than I did, you should move on if you can’t resolve things with your boss. And if you find yourself looking for work, remember that the positions you seek may be available but hiding. You’ll have to look beyond the postings if you want the full selection of opportunities.
Amy Lindgren owns a career consulting firm in St. Paul. She can be reached at email@example.com.