Salary transparency is a growing movement that emphasizes the open sharing of salary information within organizations. It aims to foster trust, reduce wage gaps, and promote fairness in the workplace. As more companies adopt transparent pay practices, the positive impacts are becoming increasingly evident. This week, we took a powerful step towards closing the gender and racial wage gap in the Commonwealth by passing An Act Relative to Salary Range Transparency. This law will require employers with 25 or more employees to disclose a salary range when posting a position and protects an employee’s right to ask their employer for the salary range for their position when applying for a job or seeking a promotion. The bill requires employers with more than 100 employees to share their federal wage and workforce data reports with the Executive Office of Labor and Workforce Development (EOLWD), which would then be responsible for compiling and publishing aggregated wage and workforce data to help identify gender and racial wage gaps by industry.
One of the primary benefits of salary transparency is its potential to reduce wage disparities, particularly gender and racial pay gaps. According to the National Women's Law Center, women in the U.S. earn approximately 82 cents for every dollar earned by men, with women of color facing even wider gaps. By openly sharing salary information, companies can identify and address these disparities, ensuring equitable pay for all employees. In Greater Boston, the 2023 gender wage gap was 21 cents, according to the Boston Women’s Workforce Council. This gap becomes more pronounced when comparing white men and women of color, where Black/African American women face a 54-cent wage gap, Hispanic/Latina women face a 52-cent wage gap, and Asian women face a 19-cent wage gap.
Transparent pay practices also contribute to increased employee satisfaction and trust. A study by PayScale, 2024 Gender Pay Gap Report (GPGR) | Payscale Research, found that employees who believe they are paid fairly are 5.4 times more likely to be engaged at work. When employees know that their compensation is equitable and based on clear criteria, it fosters a culture of trust and respect, leading to higher morale and productivity.Moreover, salary transparency can enhance a company's reputation and attract top talent. In a survey by Glassdoor, 70% of employees said they would be more likely to apply for a job at a company that shares salary information. Transparent pay practices signal to potential hires that the company values fairness and honesty, making it an attractive workplace for high-caliber candidates. In addition to promoting fairness and trust, salary transparency can improve organizational efficiency. When employees understand the compensation structure, they can make more informed career decisions and have clearer expectations about their earning potential. This clarity can lead to reduced turnover rates, as employees are less likely to leave for perceived better opportunities elsewhere.
Embracing salary transparency can drive broader societal change. By setting a standard for openness in pay, companies can influence industry norms and encourage other organizations to adopt similar practices. This collective shift can contribute to narrowing wage gaps and promoting economic equity on a larger scale. Ultimately, salary transparency is a powerful tool that can lead to fairer compensation practices, increased employee satisfaction, and a stronger reputation for companies. As more organizations recognize its benefits, the movement towards transparent pay continues to gain momentum, paving the way for a more equitable and productive workforce.
Having passed both chambers, the bill now goes to the Governor’s desk for her signature.
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For media questions, please contact:
Giselle Rivera-Flores, Director of Communications at giselle.riveraflores@masenate.gov
Sources:
- National Women's Law Center. "The Wage Gap: The Who, How, Why, and What To Do." (https://nwlc.org/resource/the-wage-gap-the-who-how-why-and-what-to-do/)
- PayScale. "The Gender Pay Gap Report." (https://www.payscale.com/data/gender-pay-gap)
- Glassdoor. "50 HR and Recruiting Stats for 2023." (https://www.glassdoor.com/research/hr-stats/)
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