By Sandra Block
From Kiplinger’s Personal Finance
Mariann Madden, the North America Fair Pay co-lead at WTW, a global human resources consulting firm, has some advice for job seekers.
Question: Under a new New York City law, companies that post a job that may be performed in that city are required to include a salary range, even for jobs that are hybrid or remote. California also has a new salary-transparency law, and 15 other states have some kind of transparency requirement. What’s behind these initiatives?
Answer: It’s twofold. One is to help reduce the pay gap among women and minorities. Studies have shown men tend to achieve higher pay in negotiating job offers than women, and that may happen because they don’t have access to information about pay. Given how small salary budgets are, if a new hire starts a job with a salary on the low end of their peers, it’s difficult to catch up, even when they’re promoted to higher-paid jobs.
Second, at a time when the cost of living is rising, these laws can help workers understand whether the job will cover their basic needs, such as rent and gas to drive to the workplace.
Question: What happens if a company violates these transparency requirements?
Answer: The New York City law outlines the fines for violations, but we haven’t seen any enforcement yet. When Colorado enacted its pay-transparency law in 2021, a number of companies stated in their job postings that they wouldn’t consider applicants from Colorado. That changed after the Wall Street Journal published an article about these recruiting practices and the state’s attorney general followed up with the offenders.
Companies might also face pressure from job seekers and employees who want to understand why they aren’t complying with the law. And even if companies do not publish pay ranges, there is nothing that prevents job applicants or employees from asking about the pay range of their job.
Question: How can job applicants use this information effectively, particularly when a posting has a broad salary range?
Answer: Job seekers should do their research to find out what other companies are offering and how it compares with their current pay. Employers are evaluating external market pay as well as internal pay data, and job seekers as well as employees should be taking advantage of the pay ranges posted for similar positions to negotiate a competitive pay package.
Question: Is there a risk that these pay-transparency requirements will cause job applicants to focus too much on salary and not enough on other benefits, such as health insurance and retirement-savings plans?
Answer: Job applicants should be focused on getting a competitive salary offer because so many rewards are dependent on base pay. Bonuses are often set as a percentage of base salary, and retirement-plan contributions are also often based on a percentage of base pay.
WTW partnered with the World Economic Forum to develop the global Wealth Equity Index to understand the differences between men and women in accumulating wealth through retirement, and one of the causes of the gap was differences in base pay.
(Sandra Block is a senior editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.)
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