Imagine a scenario in which every employed American has access to pay data by company, job, experience, skill level and educational attainment. In this scenario, you could adjust all of the pay “dials” to account for every conceivable variable and know exactly what an employer should pay you for an offered position.
The vital signs show we are actively moving toward making this scenario a long-overdue reality. If and when this ultimate vision will ever transpire, we cannot be sure — but momentum is on the side of those who seek complete and fair pay transparency.
A Quick Legal and Cultural Background
Most of us know that it’s taboo to discuss salaries with our coworkers. Though the law says employers can’t prohibit these discussions, an Institute for Women’s Policy Research survey in 2014 said that such conversations were either discouraged or forbidden at their workplaces. These conversations could lead to punishment, according to a PayScale article on pay transparency.
The consequence: workers are left with limited options for discovering their true economic worth. Available salary data online is usually in the form of outdated national averages and does not allow workers to adjust for the many variables that would determine their true value.
Legally, there have been key milestones on the way to pay transparency. The Equal Pay Act of 1963 prohibits sex-based wage discrimination between men and women in the same organizations, performing the same work, with the same skill, and operating in similar conditions. The Lilly Ledbetter Fair Pay Act of 2009 overturned a recent Supreme Court decision restricting the time period for filing complaints of employment discrimination concerning compensation. Recent pay equity lawsuits filed by women against the Boston Symphony Orchestra, law firm Jones Day, Google, Microsoft and Oracle have gotten the movement closer toward its objective.
One of the most promising developments occurred in June 2018, when Senators Cory Booker and Elizabeth Warren issued a letter to the Department of Justice and the Federal Trade Commission, making the case for mandating transparency about peer salaries at other organizations. The senators believe such a mandate would help to eliminate any collusion that may be occurring within industries, effectively suppressing salaries overall, and for certain groups.
Benefits of Instituting Pay Transparency Laws
The benefits of pay transparency derive from one overarching notion. “Workers have just as much of an interest in ensuring they receive competitive pay that reflects the economic value of their contribution,” according to Senators Booker and Warren.
The gender pay gap, a longstanding political hot button, could be resolved through pay transparency. Women will be able to discover what their counterparts in their company or others in the same industry earn for the same work. This will give them a rational basis to make the case for equal pay when inequities do exist. Similarly, pay gaps between racial, ethnic, and even sexual preference and identity groups are not likely to persist if pay transparency comes to pass. Naturally, this would also benefit employers, as they would be able to attract a more diverse workforce by demonstrating a record of regulatory compliance.
A related benefit is the possible elimination or reduction of salary negotiations. Studies show that women are less likely to negotiate for higher compensation, and they have been penalized when they do assert themselves. The contrast between how men and women are traditionally viewed at the negotiating table has been a boon to men and a hindrance to women. The elimination of this bias stands to narrow the gender pay gap.
Pay transparency would enable all employees to work with human resources to define employment goals. It would provide clarity about pay for positions in the organizational structure, so that employees could focus on acquiring the skills they need to move up. Clear compensation data would motivate more employees to work harder in their own professional development, knowing that outcomes would be fair and their investments would more likely produce the desired returns.
For working professionals considering an investment in a degree, the movement toward pay transparency is yet another reason to forge ahead with optimism for a more prosperous future.
Learn more about the University of Northern Colorado’s online MBA with a Concentration in Human Resource Management.
Sources:
Forbes: Pay Transparency Is the Solution to the Pay Gap: Here’s One Company’s Success Story
U.S. EEOC: Equal Pay Act of 1963 and Lilly Ledbetter Fair Pay Act of 2009
