Embracing equity means ensuring there is pay transparency
Have you been seeing a salary range on job listings?
Pay transparency laws are becoming more common in the United States, according to a report by business news outlet, CNBC.
Drawing on expert opinion and research, CNBC explores the topic of pay transparency - both its benefits and the hidden costs.
"Pay secrecy can allow gender wage gaps, racial wage gaps, various sorts of unfair pay to really flourish. More and more, we're seeing efforts to ensure that employers affirmatively provide information to job applicants or to employees about pay ranges for particular positions," explains National Women's Law Center Vice President of Education & Workplace Justice, Emily Martin.
Pay transparency laws are empowering job seekers
The rising tide of pay transparency laws could give job seekers more leverage, a benefit suggested by CNBC Business News Senior Personal Financial Correspondent, Sharon Epperson [pictured above].
"It's okay to ask, and it's also okay to look for that information before you decide whether or not that's a job you really want to go after," says Sharon.
Technology is transforming pay transparency
Technology is changing the conversation around pay transparency.
"The Internet has normalized sharing salary information. Job sites like Glassdoor, where people share their salaries more or less anonymously, have started to shift the culture and expectations," comments Emily.
The downsides of pay transparency
But some researchers and economists think that these laws could have a downside.
CNBC found that people get smaller raises. Pay transparency laws have slowed wage growth by approximately one third, which proves that it is still hard to make sure that people are compensated equitably and fairly.
Experts also believe that public wage transparency may erode the bargaining power of individual workers. Companies may refuse employees a raise because their colleagues will be able to see the wage difference.
Yet, salary transparency does give workers some information to negotiate. This could cause problems for hiring managers. Finding out the pay of other people affects people's morale.
Conversely, studies find that if employees discover that their colleague is paid more, their morale might increase. The higher salary creates goals to work towards.
Driving career growth and development
Pay transparency, according to Emily, is a win-win for businesses and employees alike.
"It helps get a better match between applicant and employer - it saves everybody time," suggests Emily.
Sharon also explains how pay transparency can drive career growth. "Pay transparency laws present an opportunity for you to ask for more than just pay - things like mentorship, travel to conferences, getting professional development," explains Sharon.
Encouraging employers to be transparent about pay
Experts have found that pay transparency policies have decreased inequality and help address the gender wage gap.
Does Pay Transparency Close the Gender Wage Gap?, a report by compensation data and software firm PayScale, reveals that disclosing how wages and salaries are set, how pay raises are decided and the criteria for awarding bonuses can mitigate the unconscious bias of managers and HR leaders who determine compensation.
But how can employers overcome the issues of pay transparency?
Blend Me, Inc. Chief Operating Officer, Kaleem Clarkson, offers answers in the CNBC report: "Come up with a structured process for you to give raises based on productivity, based on measurable Key Performance Indicators (KPIs), and embrace this change. Take the time now to fix some of those compression issues and set yourself up for future success. Information is power."
Watch CNBC's report on the hidden costs of pay transparency.
Leading important research on gender wealth gap
Reducing the gender wealth gap is also a huge factor in driving better pay transparency policies.
Insurance advisor WTW explores the issue of the gender wealth gap in its Global Gender Wealth Equity Report, created in collaboration with the World Economic Forum, which reveals a significant wealth gap between men and women at retirement.
The research highlights many reasons for this disparity across five regions and 39 markets, including the interlinked effects of career, family support, life events, and financial literacy.
The report looks at regional findings and specific actions that employers can take.
WTW Senior Director Manjit Basi discusses closing the gender wealth gap
WTW Senior Director, Manjit Basi, discusses WTW's Gender Wealth Equity Report and the Wealth Equity Index regarding the role of gender in wealth equity, and why women accumulate less wealth than men at retirement.