Zhao points out there are other potential advantages of pay transparency beyond reducing wage gaps. In hiring, for example, being open about pay eradicates information asymmetries – situations in which a prospective employee’s expectations for pay differs wildly from an employer’s. “Pay transparency can help make the job search more efficient for job seekers and employers, letting both sides skip interviews when expectations about pay are too far apart,” he says.
In the short-term, he believes, increased pay transparency might lead to higher turnover by showing employees what their skills are actually worth on the open market; it might give some workers who discover they are underpaid more confidence to quit. But in the long run, adds Zhao, a less opaque market will likely lead to less turnover and more stability because of higher retention rates, which will benefit all.
No silver bullet
For all the potential upside of pay transparency regulation, however, experts also warn that it should not be considered a panacea for making the labour market overall fairer.
For one thing, publishing pay ranges might still lead to some groups of candidates – like minorities – being offered a salary at the bottom of a stated range and other candidates – like white men – negotiating top-of-the-range pay. In the UK, where since 2017 all companies with 250 employees or more have been obliged to publish an annual gender pay gap report, some institutions have exploited loopholes to understate their wage disparities.
There’s also no conclusive evidence of a causal relationship: that all companies who accurately report their pay gaps are necessarily all more effective at making their workplaces fairer and more equitable. “For organisations, this could be a catalyst for positive change,” says Mabel Abraham, associate professor of business at Columbia Business School in New York City. But the reality, she adds, is that it will not uniformly lead to a closing of all pay gaps and an eradication of inequality. Also, the closing of a pay gap should never be considered a perfect proxy for creating a more equitable labour force.
Abraham’s ongoing research shows that one of the key predictors of whether a company will close a pay gap or not is whether leaders have actually taken the time to understand why a gap exists in the first place. “Those that do are considerably more likely to improve – or reduce – the gap,” she says.
Organise’s Draganova agrees. “[Salary transparency is] a step in the right direction, and may well go some way towards resolving long-standing issues of pay equality and equity among workers,” she says, “[but it’s] just one piece of the puzzle – on its own, it can’t guarantee a good workplace for employees or a thriving business for employers.”
from
https://dentoncountynewsonline.com/the-us-push-for-pay-transparency-bbc/
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