Job candidates in New York City will soon find it easier to decide whether or not to answer a job ad. The New York City Council passed a bill requiring employers to give a minimum and maximum wage range in every job post. The legislation, which goes into effect in May, is meant to help correct pay inequities and discrimination.
“If people don’t know what others in their organization get paid for doing the sort of work they do, they won’t have an opportunity to call out unjust pay disparities,” says Jeff Moriarty, executive director of the Hoffman Center for Business Ethics at Bentley University. “Knowing what people get paid is good for employees who are discriminated against, as well as for companies themselves.”
“Equal pay for equal work . . . is still a problem, and this new law addresses the ‘equity’ in ‘diversity, equity, and inclusion,'” says Matt Kerzner, director at the Center for Individual and Organizational Performance at accounting firm EisnerAmper.
The move follows a trend toward salary transparency, as states such as Colorado, Connecticut, and Maryland enact similar laws. Experts suggest that other cities and states may follow suit soon.
A Better Candidate Experience
Whether or not it’s legally required, including salaries in job posts can improve the recruiting process for employers and candidates. Erin Lau, manager of HR services with Insperity, says business leaders in all locations should proactively lean into this wage transparency trend and leverage it for a competitive advantage.
“When companies list salary ranges it can have a positive impact on the brand,” she says. “The transparency reflects well on job seekers and helps to build trust by sharing the range. Since there are no deep, dark secrets about how the company compensates its workers, it might attract more highly skilled workers.”
Transparency saves time and allows both sides to cut to the chase. “Candidates need to know how to compare jobs, and whether [they] will match their specific compensation requirements,” says Margot Moellenberg, CFO at the staffing solutions company Wonolo. “If salary is not posted, both parties can spend weeks moving through a process that ultimately ends up disappointing one or both.”
Jamie Kohn, director in Gartner’s HR practice, agrees: “Recruiters spend a lot of time building relationships with candidates who are never going to accept an offer,” she says. “By being transparent about salary range, companies can spend more time on candidates they can afford to hire. In fact, even before the pandemic, 25% of candidates reported backing out of a hiring process because compensation for the role didn’t meet their expectations. With inflation and wage growth increasing, this has likely gone up.”
Transparency also helps employers get ahead of misinformation, Kohn says, noting, “Salary information is out there. Companies have two options: Share their salary ranges or risk candidates getting incorrect information elsewhere.”
In Gartner’s 2021 Candidate Panel Survey, 75% of candidates reported visiting at least one employer review website such as Glassdoor, Salary.com, or Payscale in the last year, Kohn says.
The Potential Downside and a Fix
Companies located in some states may find it more difficult to compete if they’re hiring remote workers, which has caused Kerzner to have mixed emotions about the law and its ripple effect. “How does this law make it fair for those organizations that operate in the states that have a lower cost of living and pay lower wages as a result?” he asks. “It can also cause a problem with people leaving jobs in their local community for higher-salaried jobs and never seeing the state or spending their wages in the local community in which they work. This could be like stealing from Peter to pay Paul.”
To respond, Kerzner recommends that companies periodically review their wages and benefits to stay competitive in the changing market. Moriarty adds that it’s possible that pay disparities have creeped into an organization over time, and sharing information about pay can help companies develop and maintain better pay systems.
“Companies may be discriminating against some of their employees unintentionally,” he says. “Publicizing pay—even pay ranges—helps to address this problem. Companies should be able to defend their pay systems and decisions. If they can’t justify employees’ pay, there’s a good chance that their pay is . . . based on arbitrary or irrelevant factors.”