Some companies lower salaries in job postings as pay transparency laws take effect, new report finds
- As pay transparency laws have come into effect, employers are lowering advertised salary bands.
- A majority of firms are complying with the new laws. Some, however, are not, while others are posting pay even when not required.
State and local pay transparency laws enacted over the last few years have more employers disclosing salary ranges in job descriptions.
Yet, wages aren't growing as expected. The growth of advertised wages for new hires is slowing, according to a report from job posting service ZipRecruiter — and in some cases, it's reversing, with companies now posting lower pay ranges.
After two years of increasing wages, some companies are now leaving some jobs unfilled because candidates want more pay than the company is prepared to offer. Still, nearly half, 48%, say they have lowered pay bands for some roles in the past year, ZipRecruiter found. The site surveyed more than 2,000 recruiters and hiring managers this summer.
"Employers are trying to reset candidate expectations," said Julia Pollak, chief economist at ZipRecruiter.
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When labor shortages were acute during the Covid-19 pandemic, employers were emphasizing the top of their salary ranges and paying signing bonuses, but that caused issues with existing employees.
"While they were being very competitive externally, they were threatening internal equity and internal incentives," Pollak said. "There needs to be some [salary] growth year after year to keep people around and to keep them engaged."
About 30% to 40% of employers are not complying with new state pay transparency laws, according to Revelio Labs, a workforce analytics firm. The compliance rate sits near 70% in the states that have had laws in place since 2021.
In Washington state, job applicants and current employees can file a complaint or bring a civil lawsuit if a company doesn't comply with the law. The state Department of Labor & Industries says it has received 307 complaints so far this year and has 39 currently under investigation.
Companies in Washington that are allegedly not in compliance also face numerous class action lawsuits. Attorney Timothy W. Emery, partner at Emery Reddy, a Seattle-based workers' rights law firm, has filed dozens of lawsuits against employers in the state.
"We have had so many clients reach out to us who are still facing pay inequality," said Emery. "We felt now was the time to take action on their behalf and put an end to these illegal practices once and for all."
But there has also been a spillover effect with companies that have complied with pay transparency laws. Nearly 40% of firms post salaries for jobs even in states that don't have a requirement, according to Revelio Labs data.
"With the rise of remote work, it's just too much hassle for employers to figure out" how to adjust their postings to comply with varying state and local requirements, said Lisa Simon, chief economist at Revelio Labs.
Salesloft, a revenue workflow platform based in Atlanta, publishes pay for all of its jobs posted in the U.S.
"We don't want to waste anybody's time [by taking] them through a whole interview process," said Katie Cox Branham, vice president of people at Salesloft.
The company also benchmarks salaries on an annual basis.
"We assess existing employees' salaries during our once-a-year merit increase and make adjustments to make sure that we have pay equity between existing employees and anybody that we bring in," Branham noted.
In addition to the states and local jurisdictions requiring employers to post salary ranges in job postings, employees have become more open to talking about their pay with their peers.
"Gen Z, the newest generation entering the workplace, are really starting to demand pay transparency," said Erica Keswin, a workplace strategist, speaker and author.
She advises companies to have a comprehensive strategy to address pay and to understand what will motivate their workers, from flexible work arrangements to family-care benefits and the ability to develop and grow on the job.
"It's not really a one-size-fits-all kind of thing," Keswin said.
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