Pay Transparency Laws Shine a Light on Salaries

Daniel Zhao

November 15, 2022

Key Findings

  • 83 percent of U.S. employees and job seekers report that transparency around pay bands or targets is very or somewhat important to make them feel included at their workplace.
  • Early-to-mid career (aged 18-34, 35-44) workers are more likely to value pay transparency. 84 percent of age 18-34 American workers regard pay transparency as very or somewhat important. 88 percent of workers aged 35-44 agree, compared to 78 percent of workers over the age of 55.
  • Women are slightly more likely to prioritize pay transparency. 85 percent of women report pay transparency is very or somewhat important, compared to 81 percent of men.

Transparency is coming to salaries. As of November 1, job postings in New York City are required to list their salary range. Similar laws have passed or are due to be implemented in Colorado, New Jersey, California and Washington. This recent legislation is the continuation of ongoing pressure from employees and job seekers to make the workplace, and pay in particular, more transparent.

In a survey of U.S. employees and job seekers conducted for Glassdoor by Harris Poll, 83 percent of respondents reported that transparency around pay bands or targets is very or somewhat important to make them feel included in the workplace. Pay transparency is both an opportunity for job seekers to earn their worth as well as an element of DEI strategy, fostering pay equity.

Vast Majority of American Workers Favor Pay Transparency

Overall, pay transparency is an important consideration for the vast majority of American workers, though the survey results do show differences by age and gender.

Younger generations are more likely to report pay transparency as very or somewhat important. 84 percent of age 18-34 and 88 percent of age 35-44 U.S. employees and job seekers reported pay transparency was very or somewhat important to feeling included in the workplace. Younger generations have pushed for increasing transparency in the workplace as technology and cultural change have helped to break down barriers and taboos around sharing salary. Similarly, younger workers are more likely to benefit from greater transparency as they have more of their careers ahead of them to take advantage of better and fairer pay.

By contrast, older generations are slightly less likely to report pay transparency as very or somewhat important, though still 78 percent of workers age 55-64 and 65+ agree. Pay transparency can be valuable for older workers too, but give some credit to Millennials for weakening taboos around sharing salary information.

Women are also slightly more likely than men to regard pay transparency as very or somewhat important with 85 percent of women compared to 81 percent of men responding as such. Pay transparency offers an opportunity to help mitigate the gender pay gap, reducing the importance of negotiations and subjective pay decisions that can disadvantage women.

Differences Persist Even After Controlling for Other Demographics

The differences in the importance of pay transparency between groups can be the result of different factors. For example, women are more likely to self-identify as Democrats, so controlling for politics and gender can help prevent women from appearing to be more in favor of pay transparency due to being more likely to lean Democratic. For this analysis, we use a logistic regression to control for different demographic characteristics (more detail in the methodology section), and we find:

  • Millennials (born 1981-1996) have 43 percent greater odds of reporting pay transparency as very or somewhat important compared to Baby Boomers (born 1946-1964).
  • Women have 40 percent greater odds than men to report pay transparency as very or somewhat important.
  • Self-identified Republicans have 54 percent smaller odds than Democrats to report pay transparency as very or somewhat important.

While these differences may seem large, Americans still by and large support pay transparency. For example, the regression analysis would predict that a white Baby Boomer man, self-identified Republican, would still be 71 percent likely to regard pay transparency as very or somewhat important. Even if by contrast, a white Millennial mother identifying as a Democrat would be 93 percent likely to report it as very or somewhat important.

Why Does Pay Transparency Matter? 

Pay transparency helps level the playing field between employers and job seekers in a context where employers have held all the cards. By shining a light in dark corners, pay transparency can help make sure workers know how much to expect and when they’re being undervalued. Ultimately, pay transparency is trying to solve the problem of information asymmetry,  the term economists use for when one side of a marketplace has more information than the other, and there are many ways that providing more information could make the job market function better

Pay transparency can help make the job search more efficient for job seekers and employers alike, letting both sides skip interviews when expectations about pay are too far apart. Pay transparency can be a useful compromise: not only does it give a starting point for job seekers to negotiate from, but it also allows employers to stick to their publicly stated pay ranges so there aren’t surprises for either side at the end of the interview process.

Additionally, pay transparency may increase turnover in the short-run by showing employees what their skills and experience are worth on the open market. That can help workers climb the career ladder faster and, ultimately, secure jobs that are a better match for them in the long-run. But conversely, matching workers to employers better could lead to more stability in the long-run, benefiting employers with higher retention too.

For employers that pay at or above market, pay transparency can help an employer attract talent. For employers who can’t compete on salary alone, pay transparency could encourage them to be more creative about how they compensate their employees beyond salary, experimenting with new benefits and perks, investing in workplace culture or offering more flexible working arrangements. 

While pay transparency can be a powerful positive force for the job market, the new legislation we’re seeing is a part of a rising tide towards greater workplace transparency, rather than a sudden, dramatic shift. With the advent of online platforms like Glassdoor and increasing willingness by younger generations to share salary info, the pay transparency genie is already out of the bottle. And the bright side for employers is that, as pay transparency has become more prevalent in recent years, the sky hasn’t fallen.

Our Data and Methodology

For this analysis, we used the results of a survey conducted online within the United States by The Harris Poll on behalf of Glassdoor from August 30 - September 1 and September 6 - 8, 2022, among 4,049 adults ages 18+, of whom 2,688 are either currently employed or not employed but looking.

The sampling precision of Harris online polls is measured using a Bayesian credible interval. For this analysis, the sample data is accurate to within ±2.8 percentage points using a 95% confidence level.

To further analyze the survey results and isolate the impact of a particular characteristic, we also ran a logistic regression controlling for the following variables: Generation (GenZ, Millennials, GenX, Baby Boomer, Other; as defined by Pew Research Center); Parental status (has children under 18); Gender (Male, Female, Other); Sexual orientation (LGBTQ, Other); Race/ethnicity (White, Hispanic, Black, Asian, Other); and Political inclination (Democrat, Republican, Independent, Other).

Note that the results for the logistic regression are presented in terms of odds, and the differences between groups should be regarded as odds ratios.

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