Applying for a new job is always a venture into the unknown, but when it comes to the pay on offer, that uncertainty is lessening. Salary disclosure in US job ads appears to now be the norm. New data from job marketplace Indeed shows that as of August more than half of US job postings on the site included a salary range.
Pay transparency laws have recently spread across the US, taking effect in Colorado in 2021, New York City in 2022, and California and Washington states this year. New York state enacted its own law yesterday. But the trend to more openness about pay may also reflect a growing awareness that pay transparency is good for business.
Indeed surveyed US job seekers earlier this year and found that 75 percent of them would be more likely to apply for a job if it included salary data. Postings that included pay rates attracted 30 percent more applicants on the site. “With the tight labor market, pay transparency seems to be one of the new tactics employers can use to attract workers,” says Corey Stahle, an economist at Indeed who conducted the study.
The New York law that took effect yesterday is intended to address pay inequity and requires employers with four or more workers to include on job ads the precise pay rate or a range that they believe in “good faith” to be accurate. It applies to employees who work in New York as well as remote workers who report to New York-based supervisors.
When New York City’s law went into effect in November, some employers tested the “good faith” requirement. A job post from the financial services company Citi went viral for offering a range of $0 to $2 million, although the company later called it an error. Still, spreads ranging from $50,000 to $180,000 for a reporter job or $197,000 to $366,000 for a VP of marketing strained credulity.
Companies appear to set wide ranges to avoid ceding their bargaining power. Stahle says such shenanigans may be shortsighted, given that listings with narrower salary ranges appear to attract more applicants. When he looked at the width of salary bands on job ads that included them for the 12 months ending April 2023, he found that tighter job markets tended to correlate with narrower bands, perhaps because employers were forced to make their listings more attractive. Over that period, in-demand occupations such as childcare and food service saw their salary ranges narrow the fastest.
On the flip side, salary bands widened considerably in more employer-friendly markets, including the tech hubs of San Jose and Seattle. After the industry cut hundreds of thousands of jobs in late 2022 and early 2023, employers may not have felt compelled to be very precise, says Stahle. Listings for software developers had among the highest salary spreads, with a 35 percent gap between the high and low pay rates.
Read the full article here
