Wage transparency is a practice where employers disclose salary data during the hiring process or within the organization. Different companies vary in degrees of wage transparency, ranging from providing salary ranges for job titles to offering a complete list of salaries for everyone in the company, from the CEO to the lowest levels.
How does wage transparency work?
Wage transparency is a compensation philosophy that involves sharing information about salaries with employees and job applicants. Traditionally, salary information is often kept confidential in many private sector companies, while salary ranges are less transparent in government jobs. However, employers who commit to wage transparency choose to share more information with workers about salaries.
Companies may choose different levels of wage transparency. Some organizations may opt to share salary ranges with new and current employees, while others may publish accurate salary data, including bonuses and other discretionary compensations, for every worker in the company.
It’s noteworthy that some cities and states have legislation requiring employers to adhere to wage transparency practices. For example, employers in New York City must post a “good faith salary range” for each job advertised or for internal promotions or transfers. Meanwhile, employers in California must provide the salary range after the applicant has completed the interview.
Employers that choose to adopt wage transparency must first decide how much information they want to share with employees and candidates. Depending on their goals and legal compliance requirements, this may involve:
- Creating salary ranges for job titles and posting them internally and externally in job ads.
- Sharing all salary ranges for each position within the organization.
- Providing details about the factors that influence compensation, such as experience and skills.
- Publishing accurate salary data for each job in the company, including executive roles.
Compensation professionals often recommend that companies implementing wage transparency have a plan to measure outcomes. This can include employee surveys and pay equity audits.
It’s important to note that federal law prohibits most companies from requiring employees to keep their salaries confidential. Under the National Labor Relations Act, you have the right to discuss your salary with your coworkers in person, in writing, or via social media (as long as you do not use company equipment to do so).
How to find salary information
As a job applicant or employee, you can find salary information from various sources, including:
- Job listings: A few but growing number of employers have started to provide salary ranges in job advertisements, even in areas where they are not legally required to do so. For example, Target announced a starting wage range of $15 to $24 per hour.
- Salary websites: Sites like Glassdoor, Payscale, Indeed, and LinkedIn offer tools you can use to obtain salary data for many different professions. The Occupational Outlook Handbook from the Bureau of Labor Statistics contains wage data for hundreds of occupations.
- During the interview process: Some cities and states require employers to provide salary ranges to applicants who request them, but laws vary regarding when they must do so. For example, employers in Cincinnati must disclose the wage range to any applicant who has received a conditional job offer. However, employers in Toledo must provide the wage range to any applicant who inquires about it, regardless of whether they have received an offer.
- Internal sources: Companies that choose to disclose salary data to employees can provide it in job postings, on the company intranet, via a shared spreadsheet or document, or in any number of other ways.
- Sources
- In general, very few companies share their salary data with the public. For example, Buffer publishes its salary information, including the exact salaries of all its employees, on the company’s website.
- Better hiring process: The traditional hiring process is a black box when it comes to salaries. Employers may never disclose the salary range they have allocated, hoping that applicants will name their price first and lock themselves into a lower salary. This strategy has several downsides, including the risk of paying less for valuable employees. It also wastes time for everyone involved. Salary transparency can help speed up the hiring process, ensuring that candidates and employers are on the same page before they invest.
- Improved wage equality: Studies show that women are generally less likely to negotiate salaries compared to men. As a result, there is a gender pay gap, even after controlling for factors like job, education, and skills. Salary transparency can help close this gap by ensuring that all candidates start on the same foot – or at least in the same wage bracket.
- Reduced turnover rates: Salary transparency also positively impacts salary perception, which means employees’ feelings about whether they are being fairly compensated or not. Research indicates that employees who feel they are being paid less than the market are more likely to look for new jobs than those who believe they are being compensated appropriately.
- Increased employee engagement: When you are happy at work, everyone benefits. You are more engaged, making you more productive and effective. Ultimately, this leads to increased profits and better outcomes for the employer.
Benefits of Salary Transparency
Salary transparency has multiple benefits for job seekers, employees, and companies, including:
Frequently Asked Questions
Should employers list salary ranges in job advertisements?
In many places, employers are not required to provide salary information when advertising jobs. However, some state and local laws require employers to disclose wage ranges in job postings. Some require disclosure of salaries during the application or interview process.
How can I find out how much a job pays?
There are several ways you can obtain estimated salaries for a job. You can use salary sites like Glassdoor, Payscale, Indeed, and LinkedIn to find estimated salaries for specific job titles. The Occupational Outlook Handbook from the Bureau of Labor Statistics displays average salaries for hundreds of occupations. You can also gather salary information during the interview process by asking the employer for a salary range. Companies that choose to disclose salary data to their employees can provide it in job postings or through other internal sources.
Was this page helpful?
Thank you for your feedback! Please let us know why.
Sources:
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts found in our articles. Please read our editorial process to learn more about how we verify facts and maintain the accuracy, reliability, and quality of our content.
New York City Human Rights Commission. “Salary Transparency in Job Advertisements.”
State of California, Department of Industrial Relations. “California Equal Pay Act.”
Mercer. “How to Transition to Salary Transparency.”
National Labor Relations Board. “Your Right to Discuss Wages.”
Target. “Target to Set New Starting Wage Range.”
City of Cincinnati. “Ordinance No. 83-2019.”
City of Toledo. “Adoption of a New Chapter in Toledo Municipal Code Chapter 768, Equal Pay Act to Prevent Inquiry and Use of Salary History in Employment Practices in the City of Toledo.”
Buffer.
“Transparent Salaries”.
Glassdoor. “New Study: Job Seekers Expect Salary Negotiation and Transparency”.
Payscale. “How Does Perceived Fairness in Salaries and Pay Transparency Affect Turnover Rates?”.
Source: https://www.thebalancemoney.com/pay-transparency-6670407
Leave a Reply