Show me the money: Pay transparency's rise

Sam van der Swaagh often feels like a detective when browsing job postings. In addition to the job description, he's now focused on a tiny detail at the end: a salary range.

Having a ballpark figure of what each job would pay has helped van der Swaagh, 29, in his job search. It's also turned him into a more competitive applicant. For instance, he recently completed his Google Cloud certification because he noticed roles emphasizing that certification paid better than other technology roles. "Those pay ranges help me laser-focus on what's in high demand," he says.

As a New Yorker, van der Swaagh is now one of millions who may benefit from a new city pay transparency law. Pay transparency laws call for companies to share salary ranges with candidates, and the one in New York City—which went into effect in November 2022—requires companies to post a salary range right in each job listing. (A New York State pay transparency law kicks in come September 2023.)

Over the past 2 years, various similar laws have been put in place around the country, and they're now in effect in California, Colorado, and Washington. Companies in some states, such as Connecticut and Maryland, offer pay ranges upon request, while employers covered under Nevada law share pay ranges automatically after a candidate's first interview. In all, pay transparency laws in 2023 cover about a quarter of the American workforce.*

Pay transparency goal—and realities

The laws are part of a decades-long effort to level the paying field for workers across demographics, locations, and industries. Many workforce experts consider pay transparency laws a win.

"It's going to make job seekers' process for vetting potential companies to work for more efficient," says Lola Han, chief executive officer at Kamsa, a compensation data software provider based in Washington, DC, that works with companies on their pay strategy. Candidates will now get a better understanding of their worth and have more leverage, especially for in-demand roles, she says.

But the helpfulness of the provided ranges varies. Because local laws don't yet specify how tight salary ranges must be, some job postings have ranges that span $50,000 or more. That could make them too vague, especially for lower-level roles. "There can be a difference between following the letter of the law and providing detailed pay information that is useful for all workers," says Meredith Stoddard, vice president of life events at Fidelity Investments.

Another downside to posted pay ranges: Some people may overlook a position that offers a higher total compensation—with generous time off, 401(k) matching, and other perks—because of a lower salary, according to Stoddard. "Pay is going to be more of the frontrunner when looking for jobs," adds Han.

Pay transparency's benefits

Still, Madisson Cordova, 23, says salary ranges were critical in deciding to relocate from California to Colorado. Knowing the approximate pay for jobs at her level made switching states less risky, says Cordova, who took a new role as a program director of health and wellness at a community center in 2022. "I wouldn't have been able to make the move here without knowing what my financial situation would be," she says.

The Colorado law helped Cordova later in the job-search process too. She frequently used salary ranges to start a transparent conversation with recruiters about what she would earn. "I would even show them a piece of paper: 'Your competitor is offering this,'" she says.

With a greater focus on pay transparency, the money conversation between the job seeker and employer happens much earlier in the interview process, says Stoddard. Many job hunters are more comfortable asking about a salary range earlier on, even if it's not listed in the job description. In the past, many candidates would go through 3 or more interviews before broaching the topic, she adds. And job seekers that have been drastically underpaid are getting better bargaining power. "It's been a cultural shift. There's a sense of a more level playing field that is important to people," Stoddard says.

Pay transparency's surprises

Those posted ranges have cleared up a misconception for Gabrielle Gambrell, 35, who lives in New York and works at a large tech company. "I assumed all executive titles had commensurate compensation, but that didn't work out," she says. As a result, she recently conducted her own search differently, paying more attention to the job duties rather than the title and getting a better understanding of the room for growth. At her current role, the pay is fair, despite a lower-sounding title, she adds.

Local laws also have far-reaching effects. Take Molly Marquard, 33, who works for an e-commerce company in Chicago. She says many of the jobs she looked at recently didn't post ranges, but it was easier to figure out salary based on listings for similar positions in New York. That helped her better understand her own salary requirements. Plus, she finds that recruiters even in areas without pay transparency laws are more open about pay ranges early on. Marquard agrees with Stoddard: "The landscape has absolutely changed."

It's not just active job seekers who are benefiting. New Yorker Richard Bumbury, 37, wasn't looking for a new role when he saw pay ranges for similar openings. These helped him understand that he was underpaid at his company, an online marketplace. He began having private conversations and learned he was earning at least 30% less in his software developer job than some colleagues. "I asked for a raise, and they didn't give it to me," says Bumbury. He left the company to start his own.

As more states adopt pay transparency laws, many people feel this is only the beginning for improving job searches. It could bring about a clearer picture of what kinds of benefits to expect from the role earlier on in the process. "It will give candidates more data points," says Han.

And the companies that are more transparent about these data points could become more attractive to applicants. As Marquard continues in the corporate world, she's noting which companies are more upfront with their pay ranges. "It's almost a signal that they are working on being equitable and fair," she says.