University of Phoenix (UOPX) career advisor Heather Livingston, MA, NCC, LPC, says that, while this practice offered obvious benefits for employers, employees had less to gain. More to the point, it didn’t align with the concept of salary as compensation for services.
“You’re not supposed to pay somebody based on what they did make. You’re supposed to pay them for their qualifications and what they’re going to do for you. That’s what matters,” Livingston says.
But change is underway. Not only has inquiring about a candidate’s salary history fallen out of favor, it’s been banned in California and other states. And as of Nov. 1, 2022, employers in New York City are required to list the salary range of every advertised job.
Pros and cons of pay transparency
With laws and culture dovetailing around pay transparency, hopes are high that now is when employers will begin closing the wage gap between men and women, for people of color and even between internal employees and new hires.
But does the data support those hopes?
The fact is there isn’t a whole lot of data to review yet. As Paycor notes, pay transparency is not yet a widespread practice.
With that in mind, we’re left with anecdotal benefits and predictions that have varying levels of expertise to back them up.
CNBC, for example, cites economists’ predictions that salary transparency policies will help close those racial and gender pay gaps.
Paycor, meanwhile, suggests such policies will result in more productive and happier employees (who are confident in the value of their work) and an increase in job applications and hiring. Disclosing a role’s salary range up front, after all, eliminates unnecessary interviewing.
Livingston points to increased motivation among employees and improved trust between employers and employees. Transparency may also improve a company’s ability to attract and retain talent, she says.