Making salaries public will soon become the norm, says survey
As wage transparency laws surge, employers say they’re worried about employee reactions to pay disclosures for job seekers.
The number of North American employers that disclose salary information to job candidates is expected to surge as more and more municipalities begin to require such disclosures in an effort to provide transparency and encourage equitable pay.
State and local governments have adopted wage transparency laws in California, Colorado, Connecticut, Maryland, Nevada, Rhode Island and Washington. Those laws require employers to disclose a wage range for each job, although laws vary as to who is entitled to disclosure and under what circumstances.
According to Willis Towers Watson’s Pay Clarity Survey, 61% of employers surveyed said they are already disclosing pay rate and range information where required by law; 22% are planning to do so and 11% are considering doing so.
Even in areas where disclosure requirements are not in place, employers are increasingly likely to provide salary information to job seekers, according to the survey. While only 17% of companies currently disclose pay range information in U.S. locations where it is not required by law, as many as 62% of respondents said they are planning to or considering disclosing pay rate information, including hiring ranges and salary ranges, in the future, the survey found.
Job seekers, current employees want to know
“Regulatory requirements are only one factor in the expected increase in disclosures and communication about pay,” said Mariann Madden, North America Fair Pay co-lead at WTW. “Job seekers and current employees want to know and understand that they are treated fairly and are provided with equal opportunities to thrive and grow within the organization.”
For employers who have already begun disclosing pay information, 38% said they are fielding more questions from existing employees and 27% are fielding questions from prospective employees. Nearly one in six companies (16%) are also seeing an increased number of candidate applications.
Some companies not ready for transparency
Some companies, however, are holding back on communicating pay information, with about one-third saying their pay programs are not ready for this type of transparency and a similar percentage citing administrative complexity. One-quarter of employers surveyed said they lack a clear job architecture that would allow them to disclose pay information.
Nearly half of respondents, however, said they are hesitant about disclosing pay information because they are worried about possible employee reactions, and 15% had legal concerns.
Strategies about how to determine what pay information to disclose and where differed among employers surveyed. Of those who already disclose or are planning to disclose information for at least one location, most are interested in revealing hiring rate/range (58%), followed by full salary range (48%), a narrow segment of the salary range (20%), a wide segment of the salary range (16%), market rate for the role (16%), or budgeted rate for the role (9%).
The survey also found that 71% of companies plan to use a consistent approach in determining which pay rate and range information will be disclosed across all jobs. Over half of organizations (57%) are applying a geographic pay policy to determine pay rates and ranges, and disclosures will differ based on the location of the job, employers said.
Most organizations plan to provide a narrative on their approach to managing pay equity. One-third of North American organizations are already disclosing information on their approach to managing pay equity, and 53% expect to do so in the future and on a global level.
“We’re seeing a clear trend among employers around the globe publicly committing to fair pay,” says Lindsay Wiggins, North America Fair Pay co-lead at WTW. “In North America, companies are beginning to disclose their adjusted pay gaps, while in Europe more organizations are sharing their fair pay ambitions as well as their plans to monitor, track and communicate progress toward their commitments. We expect that level of transparency will likely become the norm as external stakeholders demand more clarity and visibility into companies’ pay management practices.”
The survey of 388 North American employers was conducted in June and July 2022.
Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM’s Retirement Advisor magazine and LifeHealthPro online channel.