Show them the money: ‘Pay transparency’ comes to New York

New law requires employers to disclose pay ranges for open positions, aiming to reduce pay disparity

Today's expression: Push the envelope
Explore more: Lesson #526
December 5, 2022:

A new law in New York City requires all job postings to include a "good faith" range of base pay. The purpose is to help jobseekers negotiate fairer compensation. The law's authors hope the new rules reduce the pay disparity between men and women. But there are ways around the law. Plus, learn the English expression "push the envelope."

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How much does your new co-worker make? That might sound like juicy gossip. But in New York, that’s now common knowledge

Lesson summary

Hi there everyone, I’m Jeff and this is Plain English, where JR and I help you upgrade your English with current events and trending topics. By listening here, you’ll expand your vocabulary, improve your listening, and maybe even enjoy the topics. I said maybe!

If you work in New York City, here’s something trending: salaries are now public—at least for job postings. It’s part of a movement called “pay transparency.” On today’s lesson, we’ll talk about what it means for jobseekers—those are the people looking for a job—and what it means for employers.

In the second half of the lesson, I’ll show you how to use the English phrase “push the envelope.” And we have a quote of the week. Let’s dive in.

Pay transparency lands in New York

Salary negotiations are miserable—this is a commonly-held opinion among jobseekers everywhere. The employer seems to have all the information and all the power, leaving the job candidate feeling powerless. The employer knows how much they pay all their other workers, and the employer probably has access to confidential or private industry reports with a lot more information. The employer might have had five, ten, or twenty other applicants; they know what the alternatives are. The jobseeker, on the other hand, knows what he or she makes, but that’s about it .

This information imbalance leaves jobseekers at a disadvantage —but some jobseekers are better at negotiating than others. And many studies suggest that women are especially bad at negotiating their salaries; men, speaking in general, are more willing to push the envelope and ask for a higher wage—and since they’re more willing to ask, they’re more likely to get it. This is one potential reason why women and minorities tend to make less money for the same work.

But this information imbalance is starting to change. On November 1, New York City implemented a long-awaited law. It’s called the Salary Transparency Law, and it requires employers to disclose a salary range for all jobs that they advertise—on their web sites, job boards, and even on printed flyers they might hand out .

The law requires the employers to state the minimum and the maximum that they would pay a qualified candidate. The law says that employers must make the estimates in “good faith,” meaning that they must post a range that they honestly believe they would pay the successful candidate.

This rule applies to base pay only, whether that’s an annual salary or an hourly wage. Employers are not required to disclose things like health insurance, vacation, pension contributions, bonuses, or other benefits.

Authors of the law hope that pay transparency will help reduce the disadvantage for women and minorities. If there’s a minimum and a maximum, then the range for negotiation is already established before the specific salary negotiations start.

For example, let’s say that a job requires five to ten years of experience, and the pay range is $100,000 to $130,000 per year. A candidate with eight years of very direct, relevant experience can negotiate toward the higher end of the range. Someone with only five years of experience can expect somewhere toward the lower end of the range. But at least both sides know what the range is, whereas before, the employer had all the information.

Pay is one of the most important factors that jobseekers consider when looking for a new position, so transparency on pay will likely help them more easily identify jobs that would fit their requirements. And a lot of people who casually browse job listings might be more motivated to apply if they knew more about the potential compensation.

Employers, too, might find something to like in this arrangement. At first glance , it seems like they’re losing a little bit of negotiating leverage—and they are, in the short run. But employers might find this saves them time. For example, if they go all the way through the interview process, make an offer, and only then discover the candidate has high salary requirements—they’ve wasted a lot of time on someone who was never going to accept their offer.

Think of this, too. Imagine an employer successfully negotiates a low starting salary for a qualified female or minority candidate. Congratulations! The employer just saved, say, $5,000 per year. But now imagine that candidate starts work, and three months in, she finds out she’s being paid less than her peers. Now she might be disgruntled, resentful, and more likely to quit. Was that small savings in salary worth it to the company? Maybe not if it leads to higher turnover.

If the employer discloses the pay range ahead of time, then every new employee knows they’re in the range—they won’t find out later that they’re being paid less than the market rate. This can increase trust and job satisfaction.

New York is not the only place where this is happening. The state of Colorado implemented a similar law in 2021. Washington state, which includes Seattle, will have pay transparency in January. California will soon follow; a similar bill is being considered at the state level in New York, which would apply to jobs outside New York City.

There are some potential pitfalls. First, everyone will want to be at the high end of the range. If the range is $100 to $130, who is going to accept $101 and be happy? So if everyone wants to be at the high end of the range, employers might purposely publish narrower ranges, with lower ceilings, for new jobs. They can then get around the rules by giving big raises after a few months.

Second, pay transparency doesn’t affect fringe benefits or one-time bonuses. So the good negotiators might be able to exploit this loophole. They may say, fine, give me the $130,000 top-of-the-range salary. But I also want a guaranteed bonus of $25,000. A bad negotiator might not think to ask for a guaranteed bonus. The gap in compensation might remain, even if the gap in base pay is narrower.

Relieve the tension

I used to work at a very, very big accounting and consulting firm. And over the years, they started to become more transparent about what you could expect to earn at different stages of your career. Pay was different by city, by division, by many factors. But in recent years, it was possible to have a general understanding of what you could expect to make as you got more and more senior.

And I think as the firm opened up a little about these ranges, people’s anxiety started to fall a little. Fewer people were afraid they were being cheated. And by knowing what they could make as they continued to get promoted, people had something to look forward to.

So in general, the secrecy over pay probably didn’t work for either side. The law might do some good, but I think legislators are kidding themselves if they think they can erase pay discrepancies just by passing a law. The good negotiators will still find a way around this. So my best advice for jobseekers is to prove your value, know your worth, ask for what you want, and then ask for a little more.

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Expression: Push the envelope