Effects of pay transparency are being felt
Knowing if you’re being paid fairly for the work you do is a mystery shrouded in a lack of information. That may be changing, though, and pay transparency may be the catalyst. It’s a growing trend for companies to reveal what a job opening or current position pays — whether voluntarily, or because governments mandate it.
Navigating salary ranges
So far, about a dozen states and municipalities have mandated access to salary information, including New York City, California, Colorado and Washington. Companies in the jurisdictions are generally required to post salary ranges indicating the minimum and maximum pay. Rules vary: Sometimes only job applicants must be told, while other times current employees can also request information about their pay range.
Roberta Matuson, president of Matuson Consulting in Boston, consults with companies looking for top-tier talent. She believes pay transparency is a step in the right direction.
“Knowledge is power. So, you know, if you have no idea that you can possibly earn more money, then you wouldn’t even ask for it,” Matuson said.
Is this the end of salary negotiation?
Pay transparency won’t eliminate salary negotiation, said Lexi Clarke, vice president of people at Payscale, a national
provider of compensation data and services. Instead, Clarke said it will encourage discussions of current and future pay expectations.
It will help employees and candidates “understand what their expectations should be, and where (salary) boundaries are and where there might be flexibility. It levels the playing field between employers and candidates to have a more open and transparent conversation,” she said.
And Lulu Seikaly, a senior corporate attorney with Payscale, said as current laws stand,
employers aren’t prevented from offering pay higher than what is posted for a position, as long as the company can provide reasoning for the exception.
In the past, companies would base salary offers on what an individual earned in their previous jobs, Seikaly said, but a lot of states have banned that now.”
If a potential employer asks for your salary history, Matuson said, “I wouldn’t refuse to answer; I would say, ‘Well, tell me what you’re offering for this position.’ I would just turn the question around.”
Will pay gaps be eliminated?
Pay transparency reveals salary ranges, but does it narrow gender and ethnicity pay gaps? It may be too early to tell. Payscale’s Clarke said organizations that are more open about salaries often have a well-defined compensation structure and are less likely to have pay inequities. She predicts how the gender pay gap might narrow: “Women’s salaries will increase to where they should be — some overpaid men’s salaries may decrease, to be more in line with where they should be.”
What if you’re at the low end of the range?
If you find out you’re at the lower end of a salary band, pay transparency will help you communicate with an employer about what you think you deserve, Clarke said. “And you’re anchoring that all into data, which is really powerful.”
Ask your employer how you can add more value and what skills you need to increase your pay and opportunities for promotion, Matuson said. It’s not just about money.
“There are other things that you could ask for,” Matuson said. “For example, you could say, ‘It would help me if I could work from home two days a week so that I’m not spending $50 or more a week on gas. Would that be suitable?’”
And if you’re at the top of the pay scale?
What if you find out you’re at the top of your job’s pay band? Should you worry that you’re maxed out and might be among the first employees to be cut?
“You should always be thinking, ‘I might be cut,’ ” Matuson said. But even if you’re not looking for a job, call a few headhunters to determine pay scales for your current work and potential opportunities. If you’re trying to determine a suitable salary for where you are in your career, several websites offer tools that help you see a relevant range of pay. Check out Payscale, Indeed, Glassdoor and Salary.com.