(Bloomberg) -- New York City is betting that publicly showcasing salaries will narrow its gender wage gap. Women working year-round and full-time in the world’s leading financial center took in only 85 cents for every dollar their male colleagues earned in 2019, according to Census data.
Starting on May 15, New York City will require all job postings to list the minimum and maximum salary for each position. The rule applies to jobs that are remote or in-person, salaried or hourly, that will be performed in the city by an employee working for a company with four or more employees.
Until recently, that sort of pay detail was uncommon. But now, at least 7 states will produce salary information with job postings, or upon the request of job seekers. Colorado, Nevada, Connecticut, California, Washington, and Maryland have laws with some form of salary-range disclosure required; Rhode Island will join them in January 2023. Similar laws are under consideration in Massachusetts and South Carolina. New York is the first major metropolitan city in the U.S. to enact such legislation.
“It is a game changer and it is a fabulous move in the right direction,” said Rachel Ellis, a managing partner at Livelihood Law in Denver, who worked on Colorado’s Equal Pay for Equal Work Act, which went into effect in 2021.
Publishing salaries is a key component of a three-part strategy emerging in state law, said Laura Mitchell, a lawyer for Jackson Lewis in Denver who helped companies understand the law and prepare for disclosures in Colorado, and is doing the same in New York City. Other initiatives prevent companies from asking about past salary and add more tools to find existing pay gaps.
Among those who oppose the law is a business group comprised of New York City's largest companies, including JPMorgan Chase & Co. and Goldman Sachs Group. “We believe in pay transparency and gender parity, but the City Council law does not get us there,” said Kathryn Wylde, president and CEO of the Partnership for New York City.
Wylde said the city council did not consult employers prior to passing the law. “Posting minimum and maximum salaries for job openings might work for hourly wages, but most professional jobs involve a negotiation that takes into consideration the experience, revenue-generating potential, and current compensation of the job candidate,” she said.
In New York state, a similar labor law was proposed last year. “This is one of those laws where if you’re doing the right thing, then you have nothing to worry about,” State Senator Jessica Ramos said, of employers self-policing their own wage practices. “If there are companies that are highly concerned about this, well, then that’s a red flag to me.”
The ultimate goal of pay transparency laws is to help reduce a stubborn pay gap between men and women — particularly women of color. States and cities are also increasingly prohibiting companies from asking candidates what they earned in a previous job.
The pay gap for women who worked full-time in 2020 decreased by less than one cent; the gaps were even larger for non-White women. The ratio of women’s-to-men’s earnings in the U.S. has tightened in the past few years despite setbacks during the pandemic, ending at 84.3% at the end of last year, according to the Bureau of Labor Statistics.
Still, the numbers are moving slowly. A March 2021 report by the World Economic Forum estimated that it would take 135.6 years to close gender pay gaps globally, meaning that women would only see complete parity in 2156.
Salary transparency laws can close gender and race-based wage gaps in several ways, said Laura Wolf, the Public Policy Committee Co-Chair for the Colorado Women’s Bar Association. People approaching a new job can self-select into what is worth their time and expertise, and people who are already in those roles can assess their current positions and advocate for themselves accordingly.
“Historically, we’ve seen more difficulties for women,” she said, referencing the “classic failure to negotiate that plagues women more than it plagues men.”
In a 2020 survey by Randstad, 57% of female respondents said they had never negotiated their pay, compared to 51% of male respondents who said the same. Only 36% of women said they had spoken with colleagues about pay before entering salary negotiations, compared to 47% of men.
Salary transparency laws across the U.S. have immediately made more pay information available. In Colorado, the share of jobs with a salary range has increased to 61% from 55% prior to January 2021, said Julia Pollak, chief economist for job site ZipRecruiter Inc. In New York City that rate has remained mostly flat at around 56%. That is only slightly better than the broader U.S., where about half of ZipRecruiter’s listings have salary information.
Pollak said there is strong reason to believe pay transparency does close the pay gap, citing research from Canada where it narrowed about 30%. Other studies have shown that the pay disclosure can lower overall pay because it’s more difficult for individual applicants to negotiate pay outside of the range, but that effect was much less pronounced than the pay gap reductions, she said.
Jobs with a salary range at LinkedIn have jumped by 50% in the last year, and now approach a third of all listings, the company said. At Indeed, which does not track historical trends of salary disclosure, three quarters of all new listings have a salary range, the company said in an emailed response.
The laws are not without challenges. Multistate employers are now having to navigate a patchwork of pay transparency laws that all differ slightly from each other in requirements, said Danielle J. Moss, a partner in the New York office of Gibson, Dunn & Crutcher and a member of the firm’s Labor and Employment and Litigation Practice Groups. There are also certain industries or roles where the criteria are more difficult to determine, she said.
©2022 Bloomberg L.P.
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