What to Do If Salary Transparency Has You Feeling Underpaid

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New York City’s new wage rule, which takes effect today, requires companies with at least four workers to include “good faith” estimates of minimum and maximum salaries in new job listings (including internal promotions and transfers). More wage information may seem like a good thing for workers, and it usually is. But if you’re hoping to check those lists to see if you’re fairly compensated at your current job, there are some caveats to be aware of.

Caution 1: You may not be able to use new job postings to tell if you’re currently being paid fairly.

How helpful the new rule is really depends on the employer. If they include actual salary ranges, the information can be instructive. Otherwise, it’s just noise.

Some companies are posting larger ranges, in which the maximum salary is $50,000 or $100,000 more than the minimum. Not only that, but helpful. And that can backfire on employers if existing employees see the maximum amount and want to know why they’re not at or near that level, says Tae-Eun Park, an assistant professor of human resource studies at Cornell University.

And remember, the pay transparency rule is only about salary, so bonuses and equity compensation are not disclosed. For some industries, such as tech and finance, salary is a relatively small part of the overall package.

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There’s also the risk that if New York City companies don’t want to comply with the new rule, they could start sneaking in. Instead of posting for open jobs, Park says, they turn to social networks or other less public ways to recruit candidates. That can ultimately be a negative for those with smaller networks who miss out on opportunities.

Caution 2: You may not be able to use job postings at other employers to see how you stack up.

Different companies may pay different wages for the same job; A larger company may pay more than a smaller one, for example. Your current employer can defend lower wages by pointing to their unique work culture, or to non-salary components of the compensation package – from health benefits to the flexibility of remote work.

Of course, if you see a job similar to yours at a higher salary, you should be proactive and reach out to your manager to discuss it — especially if it’s at your existing company or a similar competitor.

If you wait until year-end reviews, you’ll be too late because compensation decisions have already been made. Managers at New York City companies are being trained on how to respond to employees when they come up with compensation questions, so be prepared to explain why you deserve to be paid more than the salary range listed on the job listing.

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Vicki Salemi, a career expert at Monster.com, says that existing workers should highlight the advantages they have over the new employee — and flag any additional responsibilities they’ve taken on while the vacancy exists. Go beyond new job postings. If you’re concerned that all this talk about pay transparency is leaving you underpaid, reach out to former bosses and colleagues who were more than willing to share what they were doing when you worked together, Salemi says.

If you succeed in getting a raise, be sure to find out when it will take effect.

For workers outside of New York City hoping to use the new salary ranges in job listings to their advantage, keep in mind that New York has a higher cost of living and salaries tend to be higher.

Caveat 3: Payment transparency may have some net benefits, but that doesn’t mean it benefits everyone.

Research on Canada’s wage transparency laws shows that more information compresses wages together, so there is less inequality. This means higher earners will see lower wage growth. If the labor market cools and the US enters recession, there is likely to be more pressure on employers to lower wages amid greater transparency.

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A separate study of what happened when National Hockey League members’ salaries were suddenly revealed found that players changed the way they played. The underpaid were more focused on scoring goals rather than experiencing defense and team performance. You can imagine how that might play out for some jobs in an office setting.

Ultimately, it comes down to your manager how you feel about how fairly you are compensated. Park’s research shows that pay transparency has a negative effect on the perception of fairness in the workplace, unless a manager does a good job of clearly communicating the procedures in place for pay decisions.

So yes, ask your boss if your current salary is below the range posted for other jobs like yours. But be prepared for a disappointing answer.

More from Bloomberg Opinion:

• Am I underpaid? Too often, younger workers don’t know: Sarah Greene Carmichael

• Bosses should stop being so secretive about pay: Ruchika Tulsyan

• Salary transparency is good for everyone: Bobby Ghosh

This column does not reflect the opinion of the editorial board or Bloomberg LP and its owners.

Alexis Leondis is a Bloomberg opinion columnist covering personal finance. Previously, he covered tax coverage for Bloomberg News.

More stories like this are available at bloomberg.com/opinion


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