Why the NYC pay transparency law could be a game-changer for women everywhere

The post went viral within minutes. A recruiter, intending to impart an empowering message, announced the following: “I just offered a candidate $85,000 for a job [that] had a budget of $130K. I offered her that because that’s what she asked for. [And] I personally don’t have the bandwidth to give lessons on salary negotiation. Here’s the lesson: ALWAYS ASK FOR THE SALARY YOU WANT (DESERVE), no matter how large you think it might be. You never know how much a company has to work with.”

Thousands of outraged commenters weighed in. Some of them objected to what felt like a personal betrayal of an unspoken honor code among women. Shouldn’t we be helping our sisters know their value? Others focused not on the individual recruiter, but the companies themselves. “Post the salary range for the position and stop this mess! This is the very reason why there are pay transparency laws,” said Kira Bascombe, a Human Resources Director in the Miami area.

And now, in New York City and in a growing number of jurisdictions around the country, applicants will know how much a company has to work with for any listed position. Starting November 1, New York City employers must post salary ranges, including the minimum and maximum salary available, in job postings. Importantly, the law also applies to transfers and promotions.

Salary transparency: why does it matter for women?

Salary transparency is important to workers of all genders – but it’s especially critical for women. We know that women, and particularly women of color, are not paid equally in comparison to their male peers. For at least 15 years in this country, there has been a persistent and significant gender pay gap – or rather, multiple gender pay gaps – depending on one’s race or ethnicity.

In a 2017 Pew Research Center survey, about 42 percent of working women reported experiencing gender discrimination at work, with one of the most commonly reported forms of discrimination being earnings inequality. A quarter of employed women said they had earned less than a man who was doing the same job. Only 5 percent of men said they had earned less than a woman doing the same job.

This gap in wages can result from bias on the part of hiring managers, but the lack of historical pay transparency also contributes. Why? Because research shows that women negotiate less frequently than men when applying for jobs where the listings don’t explicitly state that wages are negotiable.

Interestingly, women negotiate less in this context not because they fear they can’t do the job, but because, in the absence of information, they worry – rightly so – that they might be penalized for wanting “too much.” Black women in particular face pushback when they ask for more money in the salary context.

But over the last few years, several states have rolled out salary transparency laws, including California, Colorado, Connecticut, Maryland, Nevada, Rhode Island and Washington. Some of these laws require that employers disclose pay ranges only when asked by a candidate; others mandate that employers post the information for all jobs, regardless of whether anyone asks to see it. Some states and cities also have moved to prevent employers from asking employees what they made in their last job. This development is important because a woman is given less than a man in her first job, and then asked about it in a subsequent interview. That low salary follows her wherever she goes, perpetuating the gender pay gap. Eliminating that question from the interview process helps women leave those wage gaps behind.

Salary transparency benefits companies, too

Why should companies embrace the practice of disclosing salary ranges? Quite simply, employees of all genders want and value salary transparency. Having trained thousands of people in negotiation, I’ve heard many clients wonder if they are being valued appropriately, and in the absence of good information they doubt they are – even when their pay actually is around market!

Recent research from Payscale also makes the case for greater clarity around salary ranges. “Open communication around pay is one of the most important aspects of employee engagement,” according to Payscale. “Employees want to know that they are valued. However, most have no idea if they are paid fairly.” The report indicates that 57 percent of people paid at market believe they are paid below market, and 72 percent of people paid below market accurately believe they are paid less. Generally, people seem to believe they are paid below market, with people being paid above market thinking they’re paid at market or below.

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Companies who implement pay transparency may well perform better both in retention and results. The most recent Women in the Workplace report finds that “women leaders are switching jobs at the highest rate we’ve ever seen — and at a higher rate than men in leadership.” According to the report, these women place a high value on equitable, supportive and inclusive workplaces. Many women leaders who suspect they are not paid equitably may experience job dissatisfaction or leave in order to pursue a job where the compensation matches their contributions. Therefore, salary transparency may well end up becoming a market advantage for companies who implement it.

Salary negotiation advice for women

So what should women who are negotiating a new job offer, or a promotion, do right now to achieve the best results?

One, research the laws in your state or city so that you know your rights. If you are in a place where salary ranges must be disclosed, make sure you see that information for your position.

Two, if they ask what you were making in your last job, don’t answer. Instead, re-focus the interviewer on the conversation at hand – the salary for this position. You might say something like: “Each company values a role like this differently. I’m interested in hearing more about how Company X views this position, and what you see as the salary range.” If they push, say: “I respect that you want to know what I’m seeking in terms of salary. My last job isn’t relevant, as that was a different role. But I want you to know I’m excited about this role and am open to discussing salary when we get to that point.”

Three, when you get to the place in your interview process when you are ready to discuss salary, ask about the range for the position. But don’t just ask the numbers – you also want to know what those numbers represent: “I’d love to hear the salary range for this position, and what kinds of qualifications are represented by the low and high end of that range.” Then, be prepared to show how your credentials and experience place you on the high end of that salary band!

And last: take heart. Research shows that when women have the right information in salary negotiations – when they understand the parameters of what is potentially on the table – they do as well as or better than men! With greater salary transparency on the horizon, and with greater numbers of women moving into corporate leadership, this may be the decade when the United States finally moves closer to eliminating the gender pay gap – for good.