Closing The Gap

After Colorado enacted a salary transparency law, job listings dropped—but employment went up

Catherine Mcqueen | Moment | Getty Images

Early data suggests more people want to find work in Colorado now that employers are required to list salary ranges on job postings.

That's even despite a drop in job openings within the state, according to new research from Recruitonomics, a site that analyzes labor market data.

The July analysis looks at the impact of Colorado's Equal Pay for Equal Work act, which went into effect in January 2021 and requires employers to disclose the salary range on all job ads.

Two notable things happened in the first year after the law went into effect, research author Sam Kuhn tells CNBC Make It: First, daily job postings on Indeed fell by 8.2% in Colorado compared with neighboring Utah (which was chosen as a control for having similar demographics and economic characteristics).

The drop in Colorado jobs corresponds with reports that companies were actively barring workers in the state from applying to some remote jobs, or were taking the work elsewhere, in order to avoid the posting requirement.

Second, data shows there was a 1.5% increase in Colorado's labor force participation rate relative to Utah's.

Researchers note the increase in Colorado workers can't fully be explained by the passage of the transparency law — it also corresponds with the general hiring boom across the U.S. as economies recovered from Covid shutdowns, though in many cases companies couldn't hire enough. When compared with Utah, however, it seems workers in Colorado were more eager to take up work.

The analysis also doesn't examine whether the law achieves the goal of narrowing racial and gender wage gaps.

With that said, coauthor and Recruitonomics research director Andrew Flowers says the analysis demonstrates such transparency laws are a win-win: Research shows employees are overwhelmingly in favor of salary transparency practices, and at least in this case, it appears Colorado employers had a better time of filling open jobs in a tight labor market even as the number of postings fell.

"Employers willing to incur the cost of putting their cards on the table and stating the salary range will probably see more job-seekers and less competition," Flowers says.

As more states and cities adopt similar transparency laws, including California and New York, Flowers expects companies will have a harder time of restricting their hiring markets in order to skirt compliance.

"The more it becomes a collective action toward salary transparency, the less you'll see a decline in postings," Flowers says. "They're not going to opt out of California or New York."

Check out:

What's a good salary or raise to ask for right now? How to find your number in this wild job market

It's worth it to bring up inflation at work, even if you don't get a raise now

This recruiter got laid off and landed a new job two weeks later—her best job-search tips

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Lauren Simmons reacts to a 25-year-old making $150,000 in Los Angeles
Lauren Simmons reacts to a 25-year-old making $150,000 in Los Angeles