MONEY

How much does that job pay? New laws across the country are helping job applicants find out

Jessica Guynn
USA TODAY
  • New state and local laws are putting pressure on employers to disclose salary information.
  • New York City will soon join other cities requiring employers to disclose salary information.
  • Pay transparency benefits women and people of color who've historically been underpaid, economists say.

How much does that job you are applying for pay?

Employers may not want you to know, but new laws in states and cities across the country are putting pressure on businesses to share salary information with job applicants and give women and people of color more power in job negotiations.

Starting in May, New York City will require nearly all employers to provide the expected salary range in every job posting.

“States and localities are moving to mitigate pay disparity, and it’s obviously gaining traction,” said Michelle Holder, a labor economist whose research focuses on the Black community and women of color. “I am hopeful this momentum continues at the local and state levels, and perhaps works its way up to the federal level at some point.”

At least nine states and cities are forcing employers to share more compensation information with job applicants including California and Rhode Island.

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In Maryland and Washington state, employers must disclose the pay range for a position if a job applicant requests it. Connecticut employers must provide the pay range upon request or when a job offer is made. 

In Nevada, employers must provide salary range information to any applicant who has been interviewed for a position. Employers in the Ohio cities of Toledo and Cincinnati must provide the salary range if an applicant who has received a conditional offer requests it.

Federal legislation opposed by business groups that would have made it harder for employers to pay women less than their male co-workers was blocked in June by Senate Republicans who said the Paycheck Fairness Act would primarily benefit trial lawyers, not women.

Time to pay up? More states, cities push for transparency

What’s behind the national push for pay transparency? Two words: pay equity. 

Right now, employers hold nearly all the cards. Job applicants can’t effectively negotiate without salary ranges. Existing employees vying for promotions are in the same boat. 

In response, Colorado adopted an aggressive law. The Equal Pay for Equal Work Act forces employers to list salary ranges in all job postings.

New data shows that when companies include salary ranges in job postings, the postings themselves are more likely to be inclusive.

Fans along the parade route chant for equal pay as they wait for the United States women's national soccer team in July 2019.

According to Textio, whose software analyzes job postings, language that engages women increased 83% when salary ranges were added to job postings in Colorado in 2021.

Pay transparency and inclusion go hand in hand, according to Jackye Clayton, Textio’s vice president of talent and diversity, equity and inclusion. Textio has begun including salary information in all of its external job listings.

Some businesses are taking steps toward greater transparency on their own. Whole Foods lets employees look up how much their co-workers make. Some tech companies are opening up about how they calculate salaries

More companies are considering greater pay transparency “either because of the new laws or because of their own desire for equity and inclusion in their organizations,” Clayton said in a blog post.

Who benefits from pay secrecy?

Women and people of color have historically been offered significantly lower salaries and corporations profit from underpaying them, according to Holder, president and CEO of the Washington Center for Equitable Growth and associate professor of economics at the John Jay College of Criminal Justice in New York City.

“One of the biggest reasons for pay secrecy is that the private, for-profit sector benefits from the mystery surrounding pay,” she said. “These are essentially savings they get to keep. These are costs they don’t bear.”

Lilly Ledbetter, an Alabama woman who became the face of the equal pay for equal work movement, went to work for Goodyear Tire & Rubber in 1979 only to discover when she retired 19 years later that she earned less than any other man in the same role. Ledbetter sued but the Supreme Court ruled in favor of Goodyear, saying she should have filed her lawsuit sooner. 

“People know they are being underpaid, but they can’t do anything about it,” said Marlene Kim, an economics professor at the University of Massachusetts Boston, who studies race, gender and wage-setting.

Pay gap for women and women of color fuel wealth gap

At the current pace, women won’t close the pay gap with men until 2059, according to The Center for American Progress. And it could take a century for Black and Hispanic women. 

And that has fueled an ever-widening wealth gap. The median Black household owns nearly 90% less wealth than the median white household, according to Goldman Sachs research on Black women. Lower levels of earnings for Black households drive much of the racial gap.

“Women are half the workforce and there’s a serious labor shortage right now. It would benefit companies to be mindful of what women need and that they want to be treated equally, and not punished because of their gender. Same with people of color,” Kim said. “Study after study shows that when you have a diverse workforce, you reach better decisions and you have better products because you have input from all sectors of the population. I think employers should want equitable treatment, and not just because it is the right thing but because it will benefit them in the long run.”

Businesses say they support pay equity

Employers say they are big proponents of pay transparency and pay equity. They just don’t agree with how states and cities are going about either.

The New York City law is opposed by the Partnership for New York City, whose members include JPMorgan Chase and IBM.

Kathryn Wylde, the organization's president and CEO, says the New York City law “does not get us there” and instead will hurt the local economy and make the city less competitive in luring jobs.

“Posting minimum and maximum salaries for job openings might work for hourly wages, but most professional jobs involve a negotiation that takes into consideration the experience, revenue-generating potential, and current compensation of the job candidate,” Wylde said in a statement. “A far better way to deal with the issue is through reporting of compensation for various job classifications by race and gender.”