How Pay Transparency Laws Help and Limit Job Seekers

Last December, Yun Yati Naing began searching for the job she would begin after graduating from Baruch College in New York City. It was one month after a law passed by the city went into effect requiring employers with four or more employees to post salary ranges on all new job advertisements.

“All my friends were talking about it,” Ms. Naing said. “It really made a difference going into the work force as a fresh graduate. We had no idea what the wages of these entry-level jobs were.”

Thanks to the new disclosure requirements, Ms. Naing, who was interested in a career in finance, was able to filter out opportunities that paid less than $50,000, the minimum salary she hoped to earn. She tracked job opportunities on an Excel spreadsheet, and, after a flurry of interviews and offers, she accepted a job in financial services that advertised starting pay between $54,000 and $79,000.

Her new employer’s offer came in at $60,000, and she negotiated a modest increase. She graduated in early June and has just started work.

More and more young people like Ms. Naing are entering job searches with a cleareyed view of how much money they can expect to earn, the result of a spate of new laws that require employers to list pay ranges on job advertisements. Salary transparency legislation has been enacted in California, Washington State, Colorado and a handful of cities including New York. Illinois passed a wage transparency law in May.

More than one-fourth of the U.S. labor force is now covered by salary transparency legislation, according to an estimate by the National Women’s Law Center. Norms are shifting nationwide: At Indeed, a job search website, about 45 percent of all advertisements for work in the United States now carry a pay range disclosure, up from less than 20 percent before the pandemic.

Lawmakers often introduce pay transparency laws in an effort to help reduce gender and racial wage gaps. Women working full time in the United States are paid about 84 percent as much as men, according to the Department of Labor, and Black, Hispanic and Native American workers earn 73 to 77 cents for every dollar earned by white workers. Requiring employers to list salary ranges helps demystify a job search.

“They can rest assured that what they’re getting is fair, and they can feel more confident about that choice,” said Ellen Stein, director of the Starr Career Development Center at Baruch.

For some workers, the disclosure law has revealed pay disparities where they work. Kimberly Nguyen, a 25-year-old poet and UX writer who writes consumer-facing text for digital products, was scrolling through LinkedIn in March when she found a listing for her own job. She had recently been hired by the consulting agency Photon to work as a contractor for Citigroup on a team that included full-time employees and other contractors.

During the interview process, Ms. Nguyen said, she was told that the only way to secure a full-time job at Citi was to work as a contractor first, and that the company’s goal was to eventually hire all contractors as full-time employees through a process called conversion. She was told that she would be eligible for conversion after six months of contract work.

When the job posting for a UX copywriting position at Citi popped up on her LinkedIn feed, Ms. Nguyen thought it might signal a permanent job opening for one of the contractors. The difference in pay was substantial: She was making $85,000, and the salary range on the job listing was $117,200 to $175,800.

“If the salary were maybe a $10,000 to $15,000 difference, I would be like, OK, that makes sense,” Ms. Nguyen said. “The contracting agency has to get their cut. Citi’s paying them to pay me. But the gap is so big.”

Posting on Twitter about the situation, Ms. Nguyen wrote, “My company just listed on LinkedIn a job posting for what I’m currently doing (so we’re hiring another UX writer) and now thanks to salary transparency laws, I see that they intend to pay this person $32k-$90k more than they currently pay me, so I applied.”

Later, she attended a meeting where she asked her Citi supervisors about the job advertisement. Some of the other contractors on her team had also reached out to management with questions about the post and the salary, which was higher than what they were earning. Frustrated after not receiving a clear response, she added to her Twitter thread.

The thread went viral, drawing attention to the issue. But when we spoke in June, nothing had changed. Ms. Nguyen was still working for Photon as a contractor at Citi and had not received a raise. She hadn’t heard of anyone on her team of contractors being hired full time at the bank, though a few had been laid off. Three weeks ago, she checked her application status for the Citi job. She was no longer being considered for the role. She has been searching for new opportunities.

“Obviously the point of the law is for people to be able to advocate for themselves,” Ms. Nguyen said. “But no one’s required to do anything as a result.”

Neither Citi nor Photon responded to requests for comment.

In some cases, employers have avoided disclosing specific pay practices by posting job advertisements with salary ranges that could apply to anyone at the company, from a new hire in a cubicle to an executive with a corner office. At Netflix, for example, current job postings in California show pay ranges from $60,000 to $290,000 for a role in consumer products and $195,000 to $510,000 for a senior manager in talent and recruiting. Netflix did not respond to questions on how it had determined those ranges.

“While the whole enterprise is generally more helpful than not, there can be some ranges that are not that informative when they’re so large,” Dr. Stein of Baruch said.

Ms. Naing, the recent graduate, estimated that a quarter of the job postings she had encountered during her search in New York displayed ranges that were too wide to be useful.

The practice may be spreading in high-paying industries. Recent research by economists at the Indeed Hiring Lab has shown that published salary ranges are getting wider for occupations in pharmacy, medical information, scientific research and development, and other industries. Pay estimates for jobs in food preparation and child care are growing more precise.

“In general, occupations that are more likely to be remote and have higher pay seem to be having widening ranges, whereas those that are more likely to be lower-paid positions and are more likely to be in person are starting to see more narrowing in the last year,” Cory Stahle, the author of the Hiring Lab report, said.

One possible explanation for the opposing trends is unevenness in the labor market. While hiring at many tech companies has slowed in the past year, demand for workers in child care has remained strong. A tight labor market may pressure an employer to compete for workers, resulting in a more precise (and potentially higher) pay rate on a job listing.

By contrast, in industries that have seen layoffs, employers may be able to attract qualified applicants without posting exact salaries.

Mr. Stahle’s research also noted a geographic trend in pay data: Of the 10 cities with the most significantly widening ranges, seven were in areas with new transparency laws.

State and local governments have not said how they intend to crack down on employers that list overly broad salary ranges or sidestep pay disclosure entirely. In Colorado, where a transparency law has been in effect since 2021, a spokesperson for the Department of Labor and Employment said the state had issued 19 citations for violations of the law, most of which did not include fines, and had notified more than 440 companies of possible noncompliance.

Most of these companies corrected the issue before the state began a formal investigation. The spokesperson said that Colorado had not issued any warnings for overly broad salary ranges, and that the state was focusing on voluntary compliance rather than fines.

A press officer for the New York City Commission on Human Rights said the city had received more than 300 tips about noncompliance, but the officer did not answer questions about the substance of the complaints or whether any fines or warning letters had been issued.

Companies may find it necessary to support transparency measures in order to attract job applicants. In a survey of more than 1,000 postsecondary students and recent graduates conducted in December by Adobe, 85 percent said they would be less likely to apply for a job if the company did not disclose the salary range in the job posting.

Ms. Naing, the recent graduate, said it felt as if some companies were listing huge salary ranges “just to be spiteful,” adding that she hoped to see less of it in the future.