Hiring & Recruiting

Understanding “Pay Transparency” and How It Will Affect Hiring

There is a growing trend among states and cities requiring employers to disclose hourly rates/salary ranges to candidates at various stages, known as “pay transparency.” This can include disclosing pay ranges on job postings, when an applicant asks, or post-conditional job offers. Pay transparency laws, along with “No Salary History” laws, are designed to help to reduce the informational imbalances around pay that can ingrain existing pay disparities and achieve more equitable pay for comparable positions. According to the Society for HR Management (SHRM), “The state laws promoting pay transparency are meant to reduce the gender and racial pay gaps that persist today.”

Several states, cities and counties have already passed pay transparency legislation, and the laws have varying specifications that every business owner and hiring manager should become familiar with. SHRM reports that in North America, 33% of employers are already disclosing pay information as one way to help improve pay equity; and 53% of companies globally expect to implement pay transparency in the near future.

In addition to helping address pay inequity, employers are finding that pay transparency has other benefits related to employee engagement. There are several potential benefits to pay transparency including fair pay, trust, increased employee engagement, better retention rates and improved productivity (ADP). More employers are disclosing pay for the many benefits it brings, and this growing trend is noted in research by HR Dive: in February of 2023, 44% of job listings has employer-provided salary information, while previously in February of 2020, only 18% did.

When it comes to hiring, many companies are taking a proactive approach to disclosing pay information in job postings. More and more candidates are expecting this information and look unfavorably at opportunities that do not disclose it. Candidates often expect at least some disclosure regarding possible pay ranges and may not apply to opportunities that do not include this information upfront. According to research from HR Dive, 82% of U.S. workers “are more likely” to consider an open role if the pay range is available, while 74% “are less interested” in applying to jobs with undisclosed pay bands.

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