The Link Between Pay Transparency and Diversity

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Feb 22, 2022

Legislation requiring businesses to reveal salary ranges in job postings has been sprouting up nationwide. Most recently, New York City has enacted a law, taking effect in May, that requires all employers to list salary ranges in all job postings. Also, nine states and other localities have legislated some form of pay transparency. 

In other words, even if you aren’t in one of those jurisdictions, pay transparency may very well be coming to a vicinity near you soon. Which means it’s time to get on board with pay transparency now — but not only because it could be a law. It’s also the right thing to do if your organization has a true commitment to inclusion. 

The reason is because pay inequities disproportionately hurt people of color and women, especially women of color.

A 2021 U.S. Bureau of Labor data statistics blog describes the issue like this:

“[I]n 2020, women’s annual earnings were 82.3% of men’s, and the gap is even wider for many women of color. Though women only made 57 cents per dollar earned by men in 1973 when the Department of Labor PSA was made, progress has stalled and we’re still far from closing the pay gap.”

That is the bad news.

The good news is that new data from Textio, an augmented writing platform to generate inclusive recruitment and hiring language, suggests that pay transparency laws can help businesses to become more inclusive in their external recruitment and help with internal talent mobility.  

Textio analyzed Colorado’s new pay transparency law, enacted in January 2021, and found that in January 2020, only 23% of Colorado job posts contained salary information. Those that did contain this information had slightly (about 15%) more appeal to women. By Jan 2021, 61% of Colorado job posts contained salary details, and by Dec 2021, the number increased to 73%. 

Most strikingly, in 2021, job posts that included salary used a whopping 83% more language that engages women job applicants than posts lacking salary.

What’s more, a job post from 2021 that includes salary information is 50% more likely to use language that appeals to all ages than a job post that does not. If you put this together with the requirement to include salary in job posts, it seems that companies have become more thoughtful in their communication, especially in how they appeal to women and people of all ages. This is especially noteworthy given how much the pandemic has adversely affected women, working parents, and working moms in particular.

Ultimately, research shows that pay transparency fosters greater cohesion among employees, engenders increased employee diversity, and, perhaps most critically for bottom-line-focused employers, catalyzes greater productivity.

Which means that now is the time for you to up your recruiting game illuminating all crucial job information. Such an approach can vividly showcase to candidates your commitment to the building of a foundation of mutual trust and the prioritization of employee satisfaction and empowerment — the very same things vital to creating a happy, productive workforce that helps a business grow and prosper.

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