Pay transparency actually serves as a deterrent for applicants of color
In recent years, two schools of thought have emerged regarding pay transparency in job postings. One side favors the age-old practice of keeping salary ranges confidential, as this gives employers wiggle room in negotiations. The other side argues that including salary information makes companies more competitive[1] and ensures pay equity for all candidates[2]. There’s some evidence to support the latter point.
The national gender-based wage gap for full-time workers is 20%, but in the federal government – where salary ranges are made public – the gap is significantly lower, at 13%[3]. However, a deeper dive into employee pay shows that the benefits of that wage gap reduction aren’t widespread. On average, all women earn 82 cents for every dollar that men earn. But there are significant disparities when you examine pay by race and ethnicity[4]. Black women earn 62 cents for every dollar earned by White men, and Hispanic women fare worse, at 54 cents. Meanwhile, Asian women earn 90 cents on the dollar, and White women earn 79 cents.
So, despite the fact that salary transparency in job descriptions has encouraged equity among workers, the results are uneven. The data show that simply posting pay ranges isn’t enough to fix diversity, equity, and inclusion across industries. Instead, employers should revert to omitting salary information from job descriptions entirely.
The argument against posting salary ranges
Instantly, critics will argue that confidentiality around salaries has contributed to the very inequities that pay transparency seeks to address. However, sharing salary information has unintended consequences.
People of color have been, and continue to be, underpaid. Salary discrimination is more common than many people realize, and it has damaging, long-lasting consequences for affected employees[5]. Not to mention, employees of color often suffer from imposter syndrome on the job and during their job search. Thus, when these same job seekers see a certain salary range listed on a job description, they may feel intimidated if it’s significantly higher than what they’ve made in the past. There’s an underlying mistrust – the pay may be outstanding, but will this company find some backhanded way to justify a less lucrative package? The result is that candidates of color decide against applying, even if they are fully qualified.
Employers may have set out to encourage more diverse candidates to apply, but this level of transparency may actually accomplish the exact opposite.
Other paths to equity
Pay transparency aside, job descriptions still need to change. Employers need to think critically about what qualifications are necessary for open positions and which ones are superfluous. (Does a candidate need 10 years of experience, or will 5 suffice?) Additionally, job postings should focus on the core skills that a job requires – how can employers make these descriptions more performance-based? There should also be sensitivity to coded language[6], and there should be internal initiatives to check for and eliminate unconscious bias. After all, there are plenty of other unacceptable business practices and behaviors that need to be addressed to achieve true equity.
It’s admirable that so many employers have been willing to make pay information publicly available, but as is the case with many other well-intended DEI solutions, this is hardly more than an empty gesture that does little to solve for the underlying problems. If pay equity is on the agenda, employers will have to do more heavy lifting to make meaningful progress.
[1] Maurer, Roy. (August 6, 2018). Salary Is Most Important Part of Job Ad. Retrieved from: https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/salary-most-important-part-job-ad.aspx
[2] Dominus, Susan. (February 19, 2020). Breaking the Salary Sharing Taboo. Retrieved from: https://www.nytimes.com/interactive/2020/02/19/magazine/salary-sharing.html
[3] National Women’s Law Center. (January 2020). Salary Range Transparency Reduces The Wage Gap. Retrieved from: https://nwlc.org/wp-content/uploads/2018/06/Salary-Range-and-Transparency-FS-2020-1.17.2020-v2.pdf
[4] Bleiweis, Robin. (March 24, 2020). Quick Facts About the Gender Wage Gap. Retrieved from: https://www.americanprogress.org/issues/women/reports/2020/03/24/482141/quick-facts-gender-wage-gap/
[5] Sultan, Reina. (June 30, 2020). 11 People Talk About Confronting Racist Salary Discrimination at Work. Retrieved from: https://www.vice.com/en/article/g5p5kb/racist-salary-discrimination-workplace
[6] Stinebrickner-Kauffman. (August 15, 2017). How your job descriptions are holding your organization back. Retrieved from: https://medium.com/new-media-venture/how-your-job-descriptions-are-holding-your-organization-back-6601fc33b905
