Could new pay transparency laws lead to better pay equity for U.S. workers?

In the last two years across the talent landscape, we’ve seen disruptions in the economy like never before with wages up 4.5% which according to the Bureau of Labor Statistics is the biggest increase in 39 years. As companies had to compete for talent, they were paying higher starting wages while existing employee wages remained still. Defined as wage compression, companies must find ways to manage existing pay inequities before employees begin to question their current salary to those of their newest colleagues.

Pay is personal. Historically, employers have frowned upon employees talking about pay, but younger generations of workers, specifically Gen Z, are upending the expectations of workplace norms and behaviors. According to a report from Handshake, 42% of Gen Z and 40% of Millennials openly discuss how much they are paid with friends and work colleagues. For Gen Z, they expect their employer to be transparent about pay as it relates to salary and career progression and actively seek out employers who provide that transparency on career sites and job descriptions.  

Local and state governments have leaned into pay transparency as 17 U.S. states have enacted pay transparency legislation. In 2016, California was the first state to adopt the Equal Pay Act which prevented employers from asking for a candidate’s past salary history. New additions to the act will take effect in 2023 which will require employers to regularly report their pay data as well as allow current employees to request the pay scale for the role they are currently employed. California aims to address pay equity issues across gender and race with these latest adoptions. In 2021, Colorado enacted the Equal Pay for Equal Work Act which required employers to list pay ranges for every job opening and employers had to inform current employees of all promotional opportunities. In Connecticut, their employers must disclose a salary range but only once a candidate has received an offer of employment—unless the candidate requests it before then. In states like Nevada, Ohio, and Maryland, the onus of gaining insights on pay transparency fall to the candidate as these states do not require pay range disclosures on job descriptions. 

The future for pay equity is in sight as five years ago, there were only five states with pay transparency laws in place. According to research by Zippia, these latest trends in pay transparency offer hope as: 

  • 80% of U.S. employers that conduct pay equity audits uncover inequity in their organization
  • Pay transparency laws can reduce the gender pay gap by 20-40%
  • Between 2019 and 2022, the number of job listings with salary ranges in the U.S. increased from 8% to 12%
  • 70% of candidates now expect to hear about salary ranges when first contacted by a recruiter

How will you address pay transparency and equity in the coming years ahead?

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