Pay transparency in job postings is responsible and equitable

The first pay transparency law was passed in Colorado in 2019. Now, just four years later, seven other states have joined them in passing similar laws, and an additional 11 states are considering pay transparency measures. In light of these developments, now is as good a time as any to get out in front of the issue in discussions with employer clients if you haven't already done so.

The number of job postings with salary information more than doubled between February 2020 and February 2023, according to Indeed, soaring to 43.7% from 18.7%. Clearly, this movement is rapidly gaining momentum — and as the labor market remains tight and job seekers have more negotiating power than in years past, it is becoming more essential by the day. 

As recently as March 2023, there were 10.8 million job openings in the U.S. While that number is down a few hundred thousand from last year, it points to the ongoing labor crisis that business leaders are facing. It also underscores how important it is to entice quality, quaxlified candidates who are empowered with information from the start of the application process and are the most likely to succeed in their roles once hired.

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HR and business leaders need to take every step they can to ensure that job seekers are empowered with the information they need to evaluate if they are interested in a position — and salary is an essential part of the equation. Resisting this reality only reflects a disconnect between hiring managers and job seekers and ultimately prevents leaders from quickly matching with candidates who are eager to apply and well suited for the role.

Being transparent with salary streamlines the hiring process and saves the job seeker and HR director from wasting time and effort. When salaries are included in a job posting, candidates can make an informed decision about the role before they even submit their application and evaluate if the job aligns with their financial and career goals from the get-go.

If a range is posted, seekers can also get a sense of the growth potential and see whether their previous job experience aligns with the job position overall. Between sectors, and sometimes even between companies, similar titles can indicate different experience levels and salaries. Rather than making job seekers sift through the sea of managers, directors, and executives, providing a salary upfront gives them concrete direction.

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For hiring managers, this self-selection means that they can count on the applications they receive to be quality candidates who are interested in the position and eliminates the ambiguity around what a high-potential candidate's expectations may be. 

Additionally, posting a salary range can give companies a leg up in attracting candidates in today's competitive job market. Doing so reflects an investment in employee wellness and transparency that can indicate to a job seeker that the company maintains these values beyond the hiring process.

When comparing across companies, job seekers can use provided information about salary, benefits and other forms of compensation to get a full picture of the company and ensure that the job affords them the benefits they prioritize. Recent research from Beqom found that 84% of job seekers were more likely to apply for a role if it listed a salary range. However, there is more to a compensation package than simply the dollar amount, and providing as much information as possible allows candidates to understand the full range of offerings.

For hiring managers at smaller businesses, for example, they may not be able to exactly match the salary of a Fortune 500 company, but illustrating other benefits such as healthcare, employee wellness benefits, flexible working hours or whatever other perks the company offers can still give them a competitive edge. It also can guarantee they are speaking to candidates whose compensation goals are aligned with these offerings. 

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Pay transparency is proven to help close pay gaps that disproportionately affect ethnically diverse, LGBTQ and women candidates. In a 2023 analysis of full-time LGBTQ workers, the Human Rights Campaign Foundation found that across all gender and ethnicities, LGBTQ-identifying employees earned "90 cents for every dollar that the typical worker earns."

According to the Bureau of Labor Statistics, women currently earn between 81 to 90 cents on the dollar, with variation between ethnicities. The same Bureau of Labor Statistics report found that ethnically diverse men earn between 75 and 79 percent of the median weekly earnings as compared to white men. For women, the difference was less, but ethnically diverse women's median weekly earnings still hovered more than 15 percent under that of white women. In addition, Aquent's 2023 Salary Guide found that in the creative and digital talent worker space, ethnically diverse talent earn an average of 2.25% less than their white coworkers in the same positions. 

Overall, pay transparency ensures that marginalized talent are empowered with the information they need to self-advocate and is an essential part of overall workplace equity. Incorporating salary ranges into job postings and sharing these ranges both internally and with the public will help companies meet their greater diversity, equity and inclusion goals.

Simply put, being transparent about salary expectations with potential employees from the start is the right thing to do. In our personal lives, most of us would say we value honest, clear communication, and as HR and benefits leaders we have the power to uphold these same values in our workplaces and on behalf of our clients. Leaders need not wait for the laws to catch up in their state in order to do the right thing. Hiring managers already know what they can afford for a given job opening, so being transparent about this level of pay is a simple step that will only benefit both the hiring director and the job seeker.