How Candidates Can Navigate Pay Transparency
Compensation is one of those uncomfortable conversations during the job offer process. At times it can feel like a poker game – not knowing the other players’ cards, taking risks or folding. In the end, even if you feel like you’ve “won” you’re still not sure if you have. It’s not a great way to begin a relationship.
What Pay Transparency Is and Why It’s So Important
Equal pay for equal work has been a goal for many decades in the U.S. Achieving this, however, has been difficult. In addition to federal equal pay law, almost every state has equal pay laws. Many states have also enacted laws prohibiting employers from asking candidates for prior salary history because this practice can promote and extend past pay disparities. But some states and municipalities are going a step further.
What if you have been consistently underpaid in your career without even knowing? This has been the impetus for new laws requiring employers to state a pay range for a position upon posting a job opening or at the request of current employees. Pay transparency laws are a new phase in the ongoing push for pay equity. Research consistently links pay range transparency to the reduction of pay inequities across gender, ethnicity, sexual orientation and other dimensions.
Eight states including California, Colorado, Connecticut, Maryland, New York, Nevada, Rhode Island and Washington have passed pay transparency laws. That means that almost 44.8 million people, or 26.6% of the U.S. labor force, are covered by pay transparency laws. Another 16 states and the District of Columbia are considering pay transparency bills this year. If these bills were to become laws, nearly 38.8 million additional people or an additional 23% of the U.S. labor force, would benefit.
The Advantages of Using Pay Transparency
All this is good news for candidates, and many employers are seeing the value as well. Much time, effort and stress are reduced when a clear pay range is stated. It creates a “meeting of the minds” from the start of the interview process, at least in terms of whether knowing both the candidate and the prospective employer have the same range in mind. Here are some tips to prepare yourself and use pay transparency to your advantage:
Understand the value of your skill set. In order to negotiate in realistic terms, you must know how you compare to others in the labor market, and you need to know if you are in the range of what the prospective employer is willing to pay. What was true five years ago may have changed. New skills might be in more demand, for instance. Working with a recruiter is very helpful because you can discuss pay before negotiating with an employer. Staffing professionals have their finger on the pulse of current market trends. Compensation can vary considerably by region, industry and skills. They can tell you how your skill set is valued in the current marketplace and how it compares to what the employer wants. This reality check is so important to manage expectations and achieve a salary number that both parties feel good about.
Ask about an employer’s pay equity practices. Many companies report that more candidates are asking about pay equity policies. Over half (55%) of job-seekers and almost two-thirds (64%) of Gen Z applicants won’t apply to a job posting that lacks wage or salary information, according to an April 2023 Joblist survey of nearly 30,000 job-seekers. In fact, many candidates will turn down offers from companies who don’t demonstrate a cohesive story on pay equity. As a candidate, it’s okay to ask about the processes and inputs that shaped the stated pay range. It creates a more honest and balanced employer-employee relationship. It can also help you make a stronger case for the salary you want.
Look at the total compensation package. Salary is just one piece – albeit an important one – of compensation. Consider what else the employer is offering that sweetens the deal like flexible work arrangements, health insurance and other benefits, and skill and career development opportunities. This perspective may help you accept a number in the pay range that might not be as high as you expected.
The Benefits of Pay Transparency
Certainly, improving pay equity is a strong case for pay transparency. When a pay disparity starts at the beginning of an employee’s career, this difference will typically continue across an individual’s career and even grow. The aim of these laws is level the playing field from the very beginning.
Pay transparency also begins the employment relationship on more solid, honest ground. Research has shown that when employees understand how pay is determined, their trust in the organization increases by 10%. This can have a positive effect on retention as well. But just stating a pay range isn’t enough. Employers must build overall transparent pay practices like internal and external pay equity analysis, manager training and good communications about overall compensation strategy. Recruiters are the conduit for this information. As a candidate, use your recruiter as a source of information about the employer, the marketplace and your value.
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