Inc. Magazine hailed 2022 as “The Year of Salary Transparency,” and LinkedIn listed salary transparency as an idea that will change the world. At least seven states, including California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, and Washington, and two cities (Cincinnati and Toledo) already have some form of pay transparency law on the books.
On Nov. 1, New York will become the largest U.S. city requiring employers to publish the salary range for every open position, promotion and transfer opportunity. This new law will apply to companies with four or more employees, including remote workers who may work outside the city.
Like any new law, salary transparency does not come without controversy.
”I would hate to see businesses make a decision to either leave New York and or not relocate here to New York because of these types of burdens,” Randy Pierce, President and CEO of the Brooklyn Chamber of Commerce, told Spectrum NY1.
Younger workers have spearheaded the salary transparency movement by using social media platforms like TikTok to call-out pay disparities in the workplace.
“People are more comfortable calling these things out on social media. And I think that has definitely led to that movement,” said Rameez Kaleem, founder and director of 3R Strategy, a pay transparency consultancy.
Kaleem quit his job two decades ago on a mission to create a fair and more equitable workforce.
“The main objective of pay transparency is to make sure that we have a fair and consistent way in how we manage pay for employees and making sure that there’s equity,” Kaleem said.
Kaleem said most critics of companies lacking salary transparency see it as a binary issue. Still, it’s much deeper than companies being open about how much they pay employees; conversations must also include company benefits.
Kaleem outlined three aspects of salary transparency:
- What do companies pay employees?
- Why do companies manage to pay this way?
- How do companies make those pay decisions?
However, some human resource professionals are skeptical about this idea and fear salary transparency will do more harm than good.
”I think it’s incredibly thorny,” said Holly Brittingham, an organizational development and human resources executive. “I think you can have people in the same job, but if you want a performance-based culture, some people are going to be better performers than others. So I think the question of equity and fairness is really tough.”
Kaleem’s response to critics: employers should give workers some control. For example, he believes employees should determine whether they would like to disclose their salary to their colleagues, not the other way around.
“It’s their [employer] responsibility to make sure that what we pay our employees is fair, it’s equitable, and it’s consistent,” Rameez said. “And then it’s the choice of the employee, whether they want to disclose this information or not.”
According to a Bankrate survey, older generations are less likely to buy into the idea of pay transparency compared to millennials and Gen Z. They are twice as likely to share their salary information with their colleagues.