Publishing salary ranges may reduce the pay gap but slow wage growth

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The rise of pay transparency laws in the United States could change the way workers negotiate annual wages in today’s fast-changing labor market.

How layoffs are mounting In the face of recession fears, an increased number of job seekers will see more positions in states that require public disclosure of pay ranges.

Colorado became the first state to require public disclosure of salary ranges in 2021. Now, jurisdictions including Washington State, California and New York passed similar mandatory disclosure laws. These measures usually affect businesses with at least a small number of employees.

Experts believe the advent of these laws could be a turning point in the ongoing fight for pay equity.

“When Colorado required it, right after that there were some companies that tried to make themselves a little cute and said in their messaging that you can do it anywhere in the country but Colorado,” said Emily Martin, vice president of education and workplace. Justice at the National Women’s Law Center. “You can’t do that when you have industry leaders like New York and California demanding it.”

The rise of these pay transparency laws could increase wages for minorities and women, who may be paid less than their peers. The pay gap is due to many factors, including job preferences and unexplained discrepancies.

But a growing body of research also suggests that this movement could hold back wage growth over time. “We found that people are getting paid less,” said Bobak Pakzad-Kherson, an associate professor of economics and entrepreneurship at Brown University.

The nuances of increasing the transparency of wages were highlighted in a the Pakzad-Kherson report, co-authored with the National Bureau of Economic Research. “Is the juice worth the squeeze? In a way, I think we have to weigh those trade-offs,” he said in an interview with CNBC.

Look video above to learn more about the growth and potential implications of pay transparency.

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