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The Wall Street Journal recently published an article, “Salary Ranges Bring Changes to the Job Hunt,” that describes new state laws that mandate employers must include a salary range in their job postings. Already in effect in Colorado, and soon to be in California and New York, pay transparency laws are a game changer for everyone involved – the employer, the recruiter, and the job seeker. As more states adopt pay transparency laws, it may soon transform the job-hunting landscape in significant ways.
For employers and recruiters, posting a salary range reduces the time and expense of recruiting talent. First, online submissions will substantially decrease. Potential candidates only apply if they qualify for compensation within the posted range. Otherwise, recruiters and hiring managers could invest time and resources in candidates that ultimately refuse a job offer because the range falls below their needs or experience.
Additionally, as pay transparency becomes more prevalent, businesses that implement it may have an advantage in hiring top talent over ones that don’t or do the minimum required to be in compliance. Think about it. If you’re looking for a job, it is likely you will gravitate toward job openings that include a salary range and away from employers that do not.
Pay transparency doesn’t solve all of an employer’s issues. Studies show that job seekers believe they are at the top of a posted range when they most likely are not. That could lead to some awkward moments, but, overall, pay transparency benefits businesses.
From the job seeker's perspective, pay transparency has multiple advantages starting with the hope it will help eliminate pay equity issues. Pay transparency’s impact on equity issues can’t be measured and assessed until enough data becomes available, but in our current environment women and minority groups continue to experience pay gaps for the same work. In theory, if people can see the pay range employers can’t get away with paying less to whomever they can.
Pay transparency streamlines the hiring process. You won’t waste time pursuing a job that won’t pay your bills or whose range is below market (more on that below). The laborious stages of a job hunt can sometimes border on the ridiculous. A series of interviews may be spread over weeks, or even months. A marathon interview process that ends with a lowball offer is a demoralizing waste of your time. Pay transparency spares both parties from engaging in what will ultimately prove to be fruitless. A little knowledge can go a long way.
Pay transparency empowers job seekers to negotiate final compensation packages, but there are some important components to keep in mind:
When companies post salary ranges, they can be broad. For example, a salary range can have a variance of tens of thousands of dollars between the bottom, midpoint, and top end of the range. Where a candidate falls in the range is based on education, experience, skill sets, and a host of intangible soft skills that may vary from job to job. However, your bargaining position increases with pay transparency. If you know the floor, you can negotiate from there.
Employees are lines in a budget. There is a good chance that a company already knows where in their salary range they intend to pay. For example, a job posting lists the salary range as $65,000 - $80,000, but the company knows the offer will be $72,000.
In states with pay transparency laws, employers may be forced to include pay ranges, but those ranges are still created by the employer. It is incumbent on the job seeker to verify the fair market value of the range. Use platforms like Payscale to research what you should be making. That way, you can be more discriminating during your job search by eliminating businesses whose salary range is below market value.
Lastly, pay transparency has a halo effect on the employed. It allows people to assess whether or not they are being paid market value in their current positions. If you believe you’re being underpaid, it is natural to think you should move jobs. However, if you see salary ranges for similar jobs at other companies that prove you’re being properly compensated, you’re more likely to stay put, value your current position more, and increase your overall job performance.
Philip Roufail contributed to this article.
Scott Singer is the President and Founder of Insider Career Strategies Resume Writing & Career Coaching, a firm dedicated to guiding job seekers and companies through the job search and hiring process. Insider Career Strategies provides resume writing, LinkedIn profile development, career coaching services, and outplacement services. You can email Scott Singer at scott.singer@insidercs.com, or via the website, www.insidercs.com.
