The New York Times: Who Benefits When Salary Info is Public?
Originally found at The New York Times
This month, laws went into effect in California and Washington State that required companies to post salary ranges on job listings. Like similar rules in New York City and Colorado, lawmakers passed them on the premise that pay transparency helped reduce wage gaps.
There’s little debate among researchers that this is the case. “It is totally 100 percent true across all the studies I’ve seen, with very few exceptions,” Zoe Cullen, an economist at Harvard Business School, said. Pay transparency laws are “very good” at reducing wage disparities, she added.
But that’s not the end of the story. As companies embrace pay transparency — either because the law forces them to, or because their employees are becoming more comfortable disclosing their salaries anyway — both employers and workers have noticed ripple effects. It’s changing how bosses set salaries. And it has the potential to make life a little less lucrative for star performers.
When Ron Harman King, the founder of a small content-marketing firm based in Colorado, started posting salary ranges on job listings in order to comply with state law, he was surprised. The candidates who responded to his ads seemed like a better fit than those who previously applied with higher salary expectations. “The interviews have been easier,” he said. “They knew what the position would pay, and they were already interested in applying for it at that range.”
Continue reading the original article at The New York Times.
Read the original research in Academy of Management Journal:
- Best Not to Know: Pay Secrecy, Employee Voluntary Turnover, and the Conditioning Effect of Distributive Justice
- Pay Transparency as a Moving Target: A Multi-Step Model of Pay Compression, I-Deals, and Collectivist Shared Values
Read the Academy of Management Insights summary.
Learn more about the AOM Scholars and explore their work:
- Valeria Alterman, University of Miami
- Peter A. Bamberger, Tel Aviv University
- Mo Wang, University of Florida
- Jaclyn Koopmann, University of Florida
- Man-Nok Wong, Sun Yat-Sen University
- Bonnie Hayden Cheng, University of Hong Kong