This column contains a correction.
This year, California, New York, Washington, and Rhode Island join the increasing number of states with salary range transparency laws. Part of a general trend toward recognizing the importance of transparency in bolstering wage equality overall, these laws require employers to disclose salary ranges to job applicants, either in job postings, during the hiring process, or upon request.
Salary range transparency laws, while promising, have only just begun to be implemented—and data capturing their impact thus far has just started to emerge. At the same time, a wealth of evidence demonstrates that providing workers with salary data can help level the playing field for women in negotiations. Moving forward, it will be critical to monitor the impact that these laws have, along with best practices for implementing and enforcing them.
This column provides an overview of which states have or are considering salary range transparency laws and why such transparency matters in the fight for equal pay.
A number of states have embraced salary range transparency
Some localities have enacted salary range transparency measures, and currently, seven states have them in effect, starting with Colorado in May 2019 and followed by Maryland, Connecticut, Nevada, Rhode Island, Washington, and California. New York has also passed salary range transparency legislation; it will go into effect on September 17, 2023.
These state laws have varying nuances, including in required disclosure of wage ranges, when and how a salary range must be provided to employees or applicants, and provisions regulating enforcement. For example, Colorado requires employers to include in job listings “a general description of all of the benefits and other compensation to be offered to the hired applicant,” along with the hourly or salary compensation/range for their position. California, meanwhile, only requires employers to provide the pay scale in the job posting, not information about “compensation or tangible benefits.”
Figure 2 details the state salary range transparency laws that are or will soon be in force.
Enforcement mechanisms and avenues to remedy complaints vary by state. In Washington, for example, a job applicant or an employee can file a complaint with the Department of Labor & Industries or bring a civil action if an employer violated the law. In Maryland, the commissioner of labor and industry may bring an action for injunctive relief and damages: If the commissioner determines that an employer violated requirements, the commissioner can issue an order to the employer compelling compliance or assess a civil penalty.
Other states are considering salary range transparency laws
Several states and cities have recently introduced salary range transparency legislation, including Alaska, Georgia, Hawaii, Illinois and Chicago, Kentucky, Maine, Massachusetts, Missouri, Montana, New Jersey, Oregon, South Dakota, Vermont, Virginia, West Virginia, and Washington, D.C. Connecticut and Maryland introduced legislation to strengthen their existing salary range transparency laws.*
Connecticut’s proposed bill would require employers to disclose salary ranges in every job posting, an improvement over the current state law that requires employers to provide applicants wage ranges upon request, prior to an offer of compensation, or at the time that a compensation offer is made, whichever is earlier.
Similarly, Maryland’s proposed bill would not require applicants to request wage ranges. Instead, it mandates that employers disclose the “hourly or salary wage or wage range,” as well as “a general description of benefits and other compensation” in public or internal job postings. If postings are not made available to applicants, then the information must be provided to them before offers are made or during compensation discussions. Employers must also provide the information any other time employees request it.
Salary range transparency benefits workers and employers
Because these salary range transparency measures have been implemented only recently, evidence as to their direct impacts on pay equity and labor force participation will take time. Nevertheless, a recent, though limited, study analyzing Colorado’s pay transparency law found that after its passage, the state’s labor force participation rate increased compared with the labor force participation rate of nearby Utah, which has “similar demographics and economic characteristics.” Over the next few years, as more laws begin to take effect—and as existing laws have been in place for more time—it will be important for researchers and policymakers to analyze their effectiveness in closing the gender pay gap.
The latest gender pay gap
Women, especially women of color, continue to face persistent gender and racial wage gaps for various reasons, including pay discrimination, occupational segregation, and disproportionate caregiving responsibilities. In 2021, women working full time, year round earned 84 cents for every $1 men earned, and all women working earned 77 cents for every $1 men earned. These disparities were even greater for women of color: In 2021, for every $1 earned by white, non-Hispanic men, Latinas and Black women working full time, year round earned 57 cents and 67 cents, respectively, and all Latinas and Black women working earned 54 cents and 64 cents, respectively, for every $1 white men earned.
These numbers translate and compound into huge losses over a woman’s lifetime. The wage gap means that full-time, year-round working women earn $9,070 less in median earnings per year than their male counterparts, while all women working earn $11,782 less than men. On average, women working full time, year round lose a combined total of $1.6 trillion per year due to the wage gap—and for women of color, these losses are much larger.
In general, it is clear that measures to promote transparency can help narrow persistent gender and racial wage gaps by reducing pay secrecy and bolstering negotiation efforts. These laws create an environment that could allow women to better negotiate their salaries with more information. Research has found that women are more hesitant than men to negotiate offered salaries—and when they do, they “typically ask for and get less” and are penalized more than men. Yet research has also found that when women know what to expect from these negotiations, gender differences diminish.
Salary range transparency also benefits employers. One study found that including salary information in job postings cut down on recruiting costs by lowering postings’ cost per click. Further, upfront information about salary helps employers recruit talent. A recent survey from ResumeLab found that 4 out of 5 individuals would likely stop “applying for the given profession” if a job posting lacked information about salary.
Conclusion
Particularly as more data becomes available, more states should consider adopting salary range transparency laws as part of their efforts to help narrow gender and racial wage gaps and help applicants navigate the hiring process. States should adopt these laws alongside other important tools in the fight for equal pay, including laws that ban salary history, promote pay data collection, and protect employees from retaliation for discussing pay.
The authors would like to thank Bela Salas-Betsch, Amina Khalique, and Maggie Jo Buchanan.
* Correction, March 23, 2023: This column has been updated to clarify that at least 15 states were considering salary range transparency laws as of publication.