‘As we move forward, pay will be more transparent’: How hybrid work could improve pay equity nationwide, according to HR experts
As organizations across the U.S. figure out how to pay a new class of remote and hybrid workers, it could have a positive impact on issues of salary transparency and pay equity, say Jason Walker and Rey Ramirez, cofounders of Thrive HR Consulting, who advise companies about how to set up and manage hybrid teams.
First, Walker tells CNBC Make It he believes proposed pay cuts for workers who relocate and work remotely are "an empty threat" from companies, especially during today's hiring crunch. Businesses that do so run the risk of hurting employee engagement, and if workers quit, it could cost the business a lot more to replace them than to just continue paying them at the same rate.
Fundamentally, Walker adds, "if you're paying people differently for remote work than in-person work, you have a lot of work to do as a compensation team to make sure that pay is fair and equitable. I just don't think you can do it. I think everyone has to be homogenized."
Further, a growing number of states and cities have enacted their own salary transparency laws for employers, Business Insider reports.
As of October, employers in Connecticut and Nevada must provide salaries to all job seekers either when extending a job offer or after an initial interview. In January 2023, employers in Rhode Island will have to provide candidates pay information during interviews, even if candidates don't request the information.
Already in Maryland, California, Washington, Cincinnati and Toledo, Ohio, employers are required to disclose pay information at some point in the hiring process, but only if a job seeker requests it.
The most transparent law exists in Colorado, where a January 2021 rule requires employers to disclose salary ranges in all job postings, notify employees of promotional opportunities and keep job description and wage rate records.
State- and city-wide pay transparency laws could have a much bigger reach in an age of remote work, where companies may opt to hire from anywhere. For example, as Business Insider reports, companies that have at least one employee in Colorado are now required to post pay levels for any remote role that could potentially be performed in the state.
Ramirez works in Denver and says the new law has the double benefit of helping job-seekers understand their value in the market, and businesses to attract top-tier talent or motivate existing employees to go for promotions by publicly advertising competitive salaries.
The transparency could also force businesses to address wage gaps between existing employees, particularly if there are glaring differences across racial and gender lines.
Discussing salary, and holding employers accountable for inequities, has become less taboo in recent years thanks to crowdsourced salary databases online and people sharing information on social media, Ramirez says. He expects the discussion will only continue to grow as people negotiate through new pay structures in a remote working environment.
"As we move forward, pay will be more transparent," Ramirez says. "It's already happening, and organizations have to be prepared for that, to answer questions from employees about how pay is set."
Younger generations coming into the workforce could challenge leaders to examine the employer-employee relationship, too. As one New York Times article puts it, Gen Z workers are more likely than older generations to be upfront about their expectations from a personal, professional and even sociopolitical standpoint — and how they believe their company can deliver on them.
That could include a greater push for closing longstanding wealth inequality divides exacerbated by unfair salary practices. Many studies show greater salary transparency can close wage gaps among employees.
"Leaders have to realize the genie is out of the bottle," Walker says. "The shift is here, and we have to accept that."
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