Employment laws are ever changing, but many states in the US are leading the way on what we think could become universal employment practices. Recent changes include New York’s latest legislation change which requires employers to disclose a salary range on job listings. When listing a job, employers must determine a minimum and maximum salary range and make that information visible to applicants. In the past couple of years, New York also made changes to the law to ban employers from asking job applicants to provide their wage or salary history as a condition of employment.
While we know there are pros and cons to any legislation changes, here are some potential upsides to these new regulations.
- Narrowing the Wage Gap
We’re all well aware that there is a need for pay equality among all employees – no matter if you’re a woman, a minority, or part of the LGBTQIA+ community. Just this year in the US (2022), Compaas reported that:
- Women earn 83 cents for every dollar earned by men.
- Black men earn 76 cents for every dollar earned by white men.
- LGBTQIA+ workers earn 90 cents for every dollar earned by non-LGBTQIA+ workers.
Disclosing salaries helps with the push for pay transparency. It nudges organisations to make sure they are paying everyone the same amount for the same role and allows those who have been blind to the discrepancies (because it’s been kept in secrecy) to become aware of the situation and advocate for themselves. Organisations can also utilse Finiti’s industry knowledge and benchmark, when putting together a business case for a new role.
- Knowing a Candidate’s Worth
When talking to a candidate, asking for their salary history could cause you to undervalue their worth. There are many factors that could play into a lower previous salary. For example, there may have been share options or more benefits offered, the location of their prior job could be in an area with a lower cost of living, or they were part of a smaller company.
Longevity at a former place of employment is something that a prospective employer values, but a lack of job-hopping means the candidate did not benefit from the 11% pay rise they may have gained each time.
Especially with the increase in remote work, those with the best talent have a choice in where they work and undervaluing them may cause employers to lose out on a great candidate. At Finiti we always help candidates to know their worth through comparative roles (they will likely be interviewing for more than one role too). As a business, if you want someone to join your team, show them what they’re worth to your business.
- Stay Competitive in the Market
Would you go to view a house to buy, without knowing the asking price? Chances are, probably not. So should you be applying for a job, when you have no idea what the salary benchmark actually is? Probably not.
While you don’t want applicants who are only motivated by money, you also don’t want your offer to come up short in a market that’s heavily favouring the candidates. By listing salary ranges on open positions, it shows the organisation has nothing to hide and is being upfront. It also encourages employers to make sure they’re benchmarking against other similar roles in the industry and this is often where Finiti step-in and help, helping to shape a highly competitive role, package and job description.
- Less Negotiation Between Parties
Being upfront with salary information allows the applicant to immediately determine if the position is right for them and meets their expectations. This means less guessing in the dark and less negotiation back and forth. This is a good thing for all parties involved, especially where time, energy and resources are of the essence.
Putting Our Recruiter Hats on
We can’t help but assume New York is leading the way in this area and more changes will ripple through more countries and markets. As recruiters, we’ve often advised our clients to look forward, rather than looking at historical salary data. Benchmarking in the market and for the role, is important to attracting the right candidate and skillset to match the role.
If this does become a legal obligation globally, it makes it even more important to start the conversation with your recruiter earlier to understand current market conditions and get up-to-date salary guidance.
If you’re a Fintech startup or firm that needs some guidance to make sure you’re offering the right package to attract the candidate you want, get in touch with us at www.finitisearch.org/contact-us