Starting November 1, New York City employers will be required to disclose minimum and maximum salaries for job openings.
Tae-Youn Park, associate professor of human resource studies in the Cornell ILR School, examines how employment policies and practices, such as compensation, affect both employers and employees. He can discuss how the pay transparency law will narrow gender and racial pay gaps and how the change could impact companies.
“Evidence is fairly clear that pay transparency narrows the pay gap. In this regard, we can expect that the New York City pay transparency law will help reduce pay inequality between different gender and racial groups. The salary information helps employees raise concerns more accurately and comfortably regarding pay gap issues, and forces managers to be more careful in making pay allocation decisions.
“While not detrimental for companies, some concerns for businesses stem from the same phenomenon: pay transparency reduces pay inequality. Some degree of inequality is actually necessary to achieve equity, and some studies show that pay transparency can reduce the size of pay inequality driven by performance or merits. This happens because people are more likely to rely on objective metrics when making pay decisions. Although this may make the justification easier, it is possible that people’s contributions that are not easily measurable (e.g., helping colleagues) are rewarded less by pay.
“Compressing the pay level differences can still be good for the organization (e.g., creating cooperative and harmonious culture) reducing social comparisons and envious emotions. However, this is something that companies may need to be aware of.”
Esta Bigler is available to explain the New York City pay transparency law and its implications for employees and employers.
Bigler's answers to commonly asked questions about the law and its impacts can be found here: Explainer: New NYC Pay Law.