More job seekers will soon be able to tell how big or small a paycheck they can expect for listed openings. Part of an effort to reduce pay disparities for women and minorities, four states — California, New York, Rhode Island and Washington — have salary transparency laws taking effect in January.
They join a growing list of cities and states around the U.S. seeking to offer job candidates more pay information. The laws are intended to help level a playing field in which women typically earn less than men for the same work. The median pay for full-time female workers in 2021 came to roughly 83% of men's pay, according to federal data.
Women of color fare even worse. Black women make 64 cents for every dollar paid to White, non-Hispanic men, according to the National Partnership for Women and Families.
"We know that women tend to lose out in negotiations around pay — we're perceived as greedy and not team players when we ask for more money," Andrea Johnson, director of state policy at the National Women's Law Center, told CBS MoneyWatch. "It's hard to find simple tools to make a dent in the intractable wage gap, and this is one of them."
Shift toward transparency
in the nation to enact a salary transparency law in 2019, while California in 2018 became the first state to ban employers from asking applicants about their salary history.
California also requires employers to disclose a job's pay range if an applicant requests it after an interview. In the new year, companies with at least 15 employees will be required to startin seeking candidates for listed jobs based in California.
Colorado's pay transparency law resulted in a 1.5% boost in the labor force participation rate compared to Utah, a neighboring state without such legislation, according to an analysis by Recruitonomics.
Rhode Island's law will require employers to give prospective employees a pay range if asked, and employers would have to disclose the pay range for a position before talking about compensation.
Washington state is mandating that employers include pay ranges in job postings alongs with a general description of benefits and other compensation. It also specified that the wage scale should include a low and high number, as opposed to open-ended phrases like "up to $29 per hour" or $60,000 and up."
New York Governor Kathy Hochul on Dec. 21 signed legislation that requires employers to list salary ranges for jobs and promotions, with the law taking effect two months after a.
"As this law goes into effect, I encourage all New Yorkers to talk about your pay, demand transparency and use this law to ensure you are earning what you are worth," Jessica Ramos, a state senator, said in a statement.
Connecticut, Maryland, Nevada and Oregon also have salary transparency laws, along with cities including Cincinnati,and Toledo, Ohio.
Risk of tension?
Business groups have argued the new rules could foster dissatisfaction in the workplace.
"During a labor shortage, or in the context of achieving diversity goals, the posted maximum may be significantly higher than the historical salary ranges," New York's five borough chambers of commerce wrote in an April letter to the New York City Council.
Some employment attorneys also note that the hot job market in recent years has driven up salaries. That could require a business to offer a new hire more money to perform the same job function as an existing employee, potentially creating tension in the workplace.
"There is a lot of potential fallout as a result of this law. You could have a current employee who will see what prospective employees are getting paid, and that can result in disgruntled employees and hurt feelings," Habinsky said.
While the laws were largely crafted with workers in mind, research has shown that increased salary transparency also helps companies better attract talent, and spares them from wasting time interviewing those who would ultimately reject the pay offered. "It's a common sense law for businesses' bottom line but also for worker power," the NWLC's Johnson said.
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