Faced with the prospect of negotiating a salary with a new employer, job candidates often feel anxious, confused, and tentative. Historically, organizations have tended to keep information about salaries for open positions opaque, assuming they benefit when prospective employees are in the dark about how much they might earn. But new laws and broader marketplace trends are moving toward greater pay transparency—and affecting the process of negotiating a salary.
A Trend toward Transparency
As of November 2022, a New York City law requires companies with at least four workers to include the potential salary range for jobs they post that might be performed in the city. The state of Colorado passed a similar pay-transparency law in 2022, and California and Washington State will also mandate that employers post salary ranges beginning in 2023.
Some companies, such as Citigroup, have voluntarily begun posting minimum and maximum salaries for open positions nationwide. And a spokeswoman for online job site Indeed said that organizations are increasingly including information about possible salaries in their listings—37% were doing so by the third quarter of 2022, reports the New York Times. American Express, Amazon, and Zillow, for instance, have all been posting salary information in their job postings.
The Pros and Cons of Pay Transparency
The new laws have been prompted by research showing that pay transparency increases equity in organizations and the broader marketplace by reducing the gender pay gap. Lack of transparency about what’s negotiable, from salary to perks to advancement opportunities, results in women being held back in the workplace and earning less than men, Harvard Kennedy School professor Hannah Riley Bowles and others have found in their work. Though salary negotiations are just one contributor to gender and racial pay gaps, salary transparency can be expected to result in more equal and equitable pay.
Making salaries transparent inevitably causes initial disruption within companies, as some employees find out they are being paid significantly less than others who are doing the same or similar work. But talent acquisition consultant Tim Meurer told the Times that Colorado’s pay transparency law forced managers “to really hold people accountable and have documented processes as to why they’re paying people, why they’re moving people’s compensation, why people are titled the way they were titled.”
Meurer acknowledges that pay transparency has the effect of boosting pay overall—something many employers are not thrilled about. “I think by and large, companies were getting away with underpaying people,” he says.
On the plus side for employers, however, job seekers are more likely to apply for positions that include salary ranges, the Times reports. The 60% of job postings on Indeed that include salary information attract about 30% more applicants. Thus, pay transparency could give organizations a competitive advantage in a tight labor market. In fact, one study found it lowered their recruiting costs.
Negotiating a Salary: Tips for Prospective Employees
Here are some guidelines on how to negotiate pay in an interview during the new age of pay transparency:
Ask for pay transparency. Even if employers in your area aren’t required to post salary ranges, they may do so anyway—or may be willing to be nudged in that direction. Before you begin negotiating a salary, ask whether salary ranges are available. If not, mention why you value pay transparency in a potential employer and how the organization might benefit from it. The more aware an organization becomes of the trend toward transparency and its potential upsides, the more willing they may become to join the crowd.
Aim high. Just because a salary range or average salary is posted doesn’t mean job candidates will automatically negotiate for stellar deals. As negotiators, we often “get in our own way,” write Simmons School of Management professor emerita Deborah M. Kolb and Jessica L. Porter in their book Negotiating at Work: Turn Small Wins into Big Gains. When considering how much to ask for salary, self-doubt about our value to the organization can make us vulnerable to accepting less than we deserve. If a salary range is available, focus on why you deserve to earn at the high end of the range rather than on your possible weaknesses.
Look beyond salary. The attention given to pay transparency puts jobseekers at risk of focusing exclusively on how to bargain salary. Although pay is clearly important, it’s just one issue that affects job satisfaction. Other key factors might include your responsibilities, how much travel will be involved, whether you can work from home, and so on. Thus, it’s critical to include a range of issues in job negotiations. Suppose the employer says you lack the experience needed to qualify for the high end of a salary range. Rather than continuing to push hard on salary, you might ask if they can provide funding for training that would help you make up for your perceived lack of experience. When negotiating a salary, discussing multiple issues simultaneously rather than considering them one at a time leads to a more creative, mutually beneficial agreement.
What other advice do you have for those negotiating a salary?