Jobs & Unemployment

Why Salary Transparency Should Be Federal Law

jobs

It’s bold but I mean it—even though I can already hear the clamoring of opponents and employers who don’t agree. Yet, we are finally making progress with the landmark, precedent-setting move in New York. And as someone who has worked in the job market sector for my entire career, I can tell you with absolute certainty that keeping a salary hidden from a potential employee is not only detrimental to them, but for your company as well. Even so, before I make my case, let's delve into the reasons why employers often hide salaries and why other pertinent details in the job description may be hidden as well (including even the company you’re applying to work for). 

While salaries are a sensitive subject for a number of reasons, as someone who has been on the receiving end of a job description without any salary information, I know how truly frustrating it can be. Especially since when it comes to the hiring process, there are many reasons why an individual chooses a job—including the title, benefits, the company, the culture or even self-actualization—but most of all, for the vast majority who work, it's for the compensation.  

Compensation is typically what makes or breaks any deal when it comes to applicants accepting a job offer, which is how it should be—you only have a limited amount of time to spend with family and friends, for leisure activities or to even just pursue other interests. This sacrifice means you should always maximize your compensation since it comes at a priceless and precious cost. Not including salary within a job description makes it harder for an applicant to determine whether the job at hand truly meets their expectations. Furthermore, this risks damaging the hiring company’s brand—imagine the scenario where a candidate has gone through multiple rounds of interviews only to reach the point of an offer, which is disappointingly and massively below their expectations. How much time is wasted on both sides? What impression does this make on the unsuccessful hire? 

So, with all this in mind, why are there still so many companies out there hiding salaries and taking such unnecessary risks with their brands and competitiveness in the labor market? Let's explore the reasons: 

Negotiation Tactics

Employers as well as recruitment consultants from third-party agencies hide the salary from candidates so they can drive a more competitive negotiation. During the hiring process the possible sale and exchange of labor works both ways where companies also attempt to sell all the reasons why a candidate would want to work for them. On top of that, companies actually seek to build a certain level of emotional attachment with the applicant and then hit them with a potentially below-market compensation offer. All while dangling a three or six-month review in their face with the possibility of realignment to market rate then. It’s a classic tactic and one that has worked successfully for many years.  

Hiding Salaries From Existing Employees

The labor market is competitive. And when employers look to hire, there’s generally a high chance that they’re hiring for the same (or very similar) job roles which they already have people employed to do. For example, let's say one worker was hired a year ago when the market required a salary of X to successfully attract an employee, but then, a year later, for that same role, the market is now requiring a higher pay rate of Y to capture new talent. Does the company really want to publicize that they’re willing to pay more and potentially have current employees (in the same role) ask for a raise? This is one of the major issues employers look to avoid.  

Skills and Experience Delta

Not all applicants have the same qualifications when applying for a job. For example, if a jobseeker applies for a role requiring at least three years of experience and has the exact minimum requirements, would that candidate be entitled to as much compensation as another one who has eight years of experience? This has been a strong reason for companies to leave the salary out of the description since many variants differentiate applicants and also affect the amount of compensation each is looking for (and can expect to receive). 

Other Non-Disclosure Tactics 

Recruitment and staffing agencies place approximately 16 million Americans in roles every year. Yet, not only do they hide the salary (on behalf of their clients), but agencies also even go one step further and hide who the employer is as well. They do this because they don’t want applicants going to the client directly—instead they want to charge their fee for finding the candidate.

This practice is simply unacceptable. How can an applicant make any kind of decision about whether a job is right for them, when they don’t even know who the employer is? Without that vital information, they know nothing about the company culture, the brand reputation, or even who leadership is. All of these are key pieces of knowledge which will ultimately help the jobseeker choose the right role to move forward with.

Summary 

A lack of transparency on salary (and other integral information) has gone on for far too long, but finally the labor market is seeing legislation intervene by forcing employers to do the right thing and end the deception. Since the implementation of the salary-transparency law in New York, employers have naturally begun to advertise the salary in their job postings. However, there has already been intentional defiance as some employers now list enormous deltas between the top and bottom salaries. This means that candidates are still very much in the dark as to what they can expect for compensation. Despite the important progress, how much longer will we have to wait for legislators to amend the law by requiring more specific salary ranges and providing best practice guidelines? Let’s keep the labor market moving forward with even more honesty and transparency.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Arran Stewart

Arran James Stewart is the co-founder and CVO of blockchain recruitment platform Job.com. Relying on a decade worth of experience in the recruitment industry, Arran has consistently sought to bring recruitment to the cutting edge of technology. Arran helped develop one of the world’s first multi-post to media buy talent attraction portals, and also helped reinvent the way job content found candidates through utilizing matching technology against job aggregation. Arran is currently launching the first blockchain recruitment platform with Job.com – which aims to be the most secure, efficient, and transparent hiring process ever. As a first-mover in online recruitment technology with a decade of experience in recruitment, Arran’s expertise has been featured in Forbes, Reuters, Wired, and Hacker Noon, among other publications.

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