Do Pay Transparency Laws Actually Matter?

• As more U.S. employers list salary ranges in job postings in response to recently passed pay transparency laws, fewer people are submitting applications without first knowing what they pay.  
• Pay transparency laws aim to promote fairness and reduce pay disparities based on factors like gender, race, and ethnicity. 
• Eight U.S. states have already implemented laws that mandate companies to provide salary ranges for all job postings. 

Employees have been vocal about their need for better pay clarity, fighting for a fairer working atmosphere that begins with the recruitment and selection stage.  

In response, a number of states and municipalities have acted, with passed pay legislation instigating reverberations throughout the nation. 

As more U.S. employers list salary ranges in job postings in response to recently passed pay transparency laws in New York City, California, Washington and beyond, job seekers are less likely to submit applications without first knowing what they pay, according to FlexJobs.  

In fact, between February 2020 and February 2023, the proportion of job ads with salary information grew from 18.4% to 43.7%, according to The Associated Press. This is a testament to the rippling effect transparency requirements have had in the hiring process. 

According to SHRM, 74% of U.S. workers say that they are less interested in applying to job postings that do not list a pay range, and 73% of U.S. workers are more likely to trust organizations that provide pay ranges in job postings than ones that do not. 

Policy goals  

Pay transparency laws are regulations that require employers to disclose information about employee compensation, either to the employees themselves or to the public. These laws aim to promote fairness and reduce pay disparities based on factors like gender, race, and ethnicity. 

Eight U.S. states have already implemented laws that mandate companies provide salary ranges for all job postings — but are these measures actually reducing wage gaps based on gender and race? It might be too soon to know, but what we do know is that the pay gap still isn’t closing.  

Achieving pay equity is complex, and a variety of policy choices will be necessary to close not just the gender pay gap, but also disparities based on race and ethnicity. 

Beyond pay transparency laws, other necessary steps include mandating federal reporting of wages by gender, race and ethnicity; banning employers from inquiring about pay history; making employers post pay ranges while hiring; and giving agencies charged with upholding nondiscrimination laws proper staffing and funding.  

Additionally, policies that raise the federal minimum wage and fortify workers’ rights to negotiate higher wages and benefits could help make progress to shrink gender and racial/ethnic pay gaps. 

Pay transparency can be very impactful. If done correctly, these laws help:

1. Promote fairness and equality: By openly sharing information about salaries, pay transparency helps to ensure that employees are paid fairly for their work, regardless of their gender, race, or other personal characteristics. This can help to reduce wage gaps and promote a more equitable workforce.

2. Encourage trust and collaboration: When employees know how much their colleagues are earning, it can foster a sense of trust and cooperation within the organization. This can lead to improved teamwork, increased productivity, and a more positive work environment.  

3. Enhance employee satisfaction and retention: Employees who feel they are being fairly compensated for their work are more likely to be satisfied with their jobs and less likely to seek employment elsewhere. This can lead to lower turnover rates and reduced hiring and training costs for organizations.

4. Support informed decision-making: Pay transparency allows employees to make better-informed decisions about their careers, such as whether to accept a job offer or negotiate for a higher salary. This can help individuals maximize their earning potential and contribute to their overall financial well-being.

5. Drive corporate accountability: This type of transparency can help hold companies accountable for their compensation practices, encouraging them to establish fair and consistent policies that align with societal values and expectations.

Eight states driving pay transparency progress with legislation:

California 

• Employers with 15 or more employees must now include a pay scale in all job postings, even for remote positions, as part of the revamped California Equal Pay Act.

Colorado 

• All employers must ensure that all their employees are aware of any job openings, promotions, and the salary scale attached to the roles, as per the Equal Pay for Equal Work Act. 

Connecticut 

• Employers are mandated, per Public Act No. 21-30, to disclose the wage range for any position when requested by an applicant or current employee.

Maryland 

• Employers must provide a wage range for a job upon request, as mandated by the Equal Pay for Equal Work Law. 

Nevada 

• Employers have to state the wage or salary range for any new positions, promotions or transfers.

New York 

• Come September, New York State will be enforcing a pay transparency law that will make it mandatory for employers to disclose the salary or salary range when advertising job, promotion or transfer opportunities within a company. 

Rhode Island 

• Employers are obligated to provide existing or prospective employees with a wage range if requested.

Washington 

• Employers with 15 or more employees must provide a wage scale to current staff before an internal transfer, as well as list the salary range in job postings — should they be asked to do so.