Pay Transparency, More Game than Gain?


            New Orleans     Pay transparency laws are well-intentioned.  They are designed to create transparency among co-workers and jobseekers in order to deter discrimination based on gender, race, and other factors.  Requiring employers to include pay ranges in job postings and advertisements in theory gives individual workers options for both bargaining higher wages or choosing wisely between various employment opportunities.  Such legislation has now put into effect in Washington State, California, and Colorado.  Illinois recently passed similar legislation, so is also on the runway.  Some cities, like New York City, have passed ordinances with these requirements within their jurisdictions.  All of this sounds good, and we need more of it.  What could be the harm?  At the same time, it’s valid to ask whether it’s really working, or whether employers are able to game the legislation and disadvantage workers?

A report in the Times underlines the question whether employers see this as more of a game, offsetting any potential gain for workers.  Interestingly, they find employers are more truthful on pay ranges when trying to fill labor shortages, especially among lower paid service workers, than they are when they are trying to fill higher paid positions.  Some high-end tech jobs have ranges that are literally hundreds of thousands of dollars.  What’s the point?  Certainly not transparency, so how can a potential or existing worker navigate that open range without putting themselves in peril.

A case in point was a subcontractor for the giant financial institution Citigroup who noticed that Citi was advertising for a full-time position that she was doing while working for their sub.  Raising the issue with her boss and Citi and then applying for the position directly got her zilch.  No response.  No new job.  Nothing.  Unsurprisingly, she is now looking for a new job.

Despite the fiction of “leaning in,” a jobseeker remains at a huge disadvantage in negotiating either starting pay or better pay with a prospective employer.  Admittedly, it helps if they have a sense of the floor, so that they can potentially compare offers from comparable firms, but employers still have almost all the leverage from that point forward.

Worse, in the cases where companies are gaming the law with wild, nonsensical ranges, none of the laws enacted to date have any real teeth.  Regulators, if they exist, can send them a notice, try a little shaming, or something, but few seem to have penalties or have the power to ban a boss from being able to advertise.

It’s hard to beat the advantages in terms of fairness and equity of having a clear wage scale and transparent policies.  Sure, some workers will always try to nudge their way forward or make a case of their superior merit or talents, and that’s to be expected, but having a scale provides clarity for both employer and worker.  Otherwise, it’s the law of the jungle and everyone is on their own.  There’s a reason why more professional and other workers are singing unions songs now, even though fewer who should be.  The only real solution is a collective one, where workers can bargain collectivity and enforce transparency and fairness in the workplace.