26 Apr Take the Lead: Unveiling Pay

Salary transparency may help close the gender pay gap—and benefit companies along the way

By Kimberly Olson

Hannah Williams asks strangers to share their salaries and then broadcasts those figures to the 1.3 million followers of her TikTok channel, Salary Transparent Street. To date, more than 5,000 people—cloud engineers, roofers, attorneys, UPS drivers, marketing directors, even real estate mogul Barbara Corcoran—have shared their earnings with her.

“This information allows workers to compare their current pay to the going market rate for their role, which many workers have trouble understanding due to pay secrecy,” Williams says. “With this information, they can evaluate whether or not they are fairly compensated and explore pay in different roles they may not have previously paid attention to.”

In past decades, such forthright talk about salaries was nearly unthinkable. But attitudes are changing. In Monster’s 2023 Equal Pay Day Poll of 2,394 US workers, 63 percent admitted they’d spoken to colleagues about their earnings.

For 27-year-old Williams, shining a light on salaries has become a mission. A few years ago, she was an overworked, high-performing senior data analyst who learned that she was being underpaid by $20,000. Once she got past the shock, she leveraged her newfound knowledge
to nab a higher-paying job. Now she wants everyone, especially women and people in marginalized groups, to know their worth.

Knowledge is power

In 1963, Congress passed the Equal Pay Act, which requires companies to pay men and women equally for the same work. But more than six decades later, women who work full-time are paid 83 percent of what men make, with the gap widening for women of color and women with disabilities, according to the US Department of Labor. (Young women now begin their careers closer to parity with their male colleagues, earning 90 cents
to the dollar, but lose ground over time.)

In Monster’s International Women’s Day Poll workplace report, 82 percent of women said the workplace benefit they value most is “fair and equal wages.” And many experts believe that declassifying salary data is key.

“When people have information about the context for their compensation, gender wage gaps as well as racial wage gaps shrink,” says Sharmili Majmudar, executive vice president of Policy, Programs, and Research for Women Employed, which works to remove barriers to economic equity.
A growing movement

Several years ago, companies like Adobe and Intel began making their salary data public in hopes of achieving pay equity. And in the last five years, laws that mandate salary transparency have popped up around the country.

Colorado, Nevada, and New York now require employers to publicly post salary ranges with job descriptions or face fines. California, Illinois, and Washington ask the same of companies with 15 or more employees, and Connecticut, Maryland, and Rhode Island require companies to furnish salary ranges if job applicants request them. Some local municipalities—from Cincinnati to Jersey City, New Jersey—have passed similar laws.

A 2023 ZipRecruiter survey of more than 2,000 hiring managers and talent-acquisition professionals found that 72 percent now include salary information in every job posting.

“The bans on pay secrecy have had the biggest impact on college-educated women’s earnings, who benefit from the transparency interventions,” says Iris Bohnet, the Albert Pratt Professor of Business and Government and codirector of the Women and Public Policy Program at Harvard Kennedy School. “We find the biggest gender pay gaps among the highest-paid employees. Lower-paid jobs tend to be standardized, and with no bonuses.”

Majmudar points out that salary transparency also has a systemic impact. “Not only do applicants see what’s publicly available, but [the company’s] existing employees see,” she says. “So it serves as motivation to proactively evaluate compensation practices and address any unjustified disparities between employees.”

Workplace win

Companies that are forthright about salary data enjoy various benefits, such as being more attractive to job candidates. In the US, 80 percent of workers are more likely to consider applying for a job if the salary is listed, according to the Society for Human Resource Management (SHRM).

“When a company provides the salary range information up-front, it’s really seen as a marker of trustworthiness,” Majmudar says. “People want to feel like they are valued and that they’re not being taken advantage of.” In a SHRM survey of 1,300 HR professionals, 66 percent said that listing pay ranges on job postings increased the quality of job applicants.

Salary transparency may even curtail turnover. A Payscale salary survey of more than 578,000 workers revealed that as a company’s salary transparency increases, employees become less likely to seek a job elsewhere. Meanwhile, an Indeed study of 1,500 workers across industries found that 81 percent of employees felt more engaged and were more loyal to their employer when they were paid fairly.

Smart steps

Organizations moving toward salary transparency should do so thoughtfully. “Just providing that information without thinking about your compensation philosophy, doing analysis of your compensation structure, and thinking about pay equity more broadly, isn’t going to yield the dividends,” Majmudar points out.

Crafting a clear compensation structure is essential. When developing the salary range for a position, review the education, experience, and skills required for that role, then gauge their market value.

Aim to keep the pay range relatively narrow. The Society of Human Resource Management recommends determining a median salary for the position (based on your company’s compensation approach), then adjusting the range to end at 25 percent above and below that median. Excessively wide salary ranges, which aren’t useful, have gotten companies into hot water for skirting local transparency laws.

Company leaders should ensure that their teams are prepared for the transition. Recruiters and HR staff, for example, need to understand the company’s compensation approach and pay bands, so they can answer questions from job seekers and employees.

Bohnet says it’s simply good business for companies to make fairness a guiding principle. “There’s a lot of research suggesting that fair treatment, fair outcomes, and fair work have positive impacts on people’s well-being and performance,” she says. “It undermines morale if I feel like I’m not rewarded fairly.”

“We’re seeing laws being introduced across states at a pretty good clip,” Maj-mudar adds. “A company can be on the leading edge of this or can be dragging. This is part of what it means to be an equitable employer, to be seen as trustworthy, to be seen as a place that people want to work at and want to stay.” DW

EXTRA!

Should You Share Your Salary with Coworkers?

Knowing how much a position pays is one thing. But should you dish about your salary with colleagues? The short answer: Proceed with caution. Here are some things to consider.

Pros

•You’ll know where you stand. Comparing paychecks will reveal whether a coworker who has the same position earns considerably more (or less).

•It can reveal inequities. If discrepancies come to light, they could motivate underpaid employees to ask for a raise.

•It can reduce gossip around salaries. If a work team is getting fixated on individual compensation, speaking openly might diffuse the situation.

Cons

•You can know the number and misunderstand the context. No two employees—even those who occupy the same role—have identical backgrounds, skill sets, and performance reviews. Learning that your colleague has a higher salary might make you feel shortchanged, even if you aren’t.

•A colleague might end up resenting you. If someone comes to think you’re overpaid, your relationship could suffer.

•It might affect productivity. If some employees end up feeling like they’re getting less than they deserve, their morale and productivity could drop.