The pay ranges being disclosed by companies because of new laws appear to be potentially helpful despite early reports of ranges that are too wide to mean much to job seekers, according to a new report.
New transparency laws requiring companies to include pay ranges in job listings took effect this year in California and Washington, and late last year in New York City and Colorado. Proponents of the laws say they are ultimately meant to help address gender and racial wage gaps.
Revelio Labs, a provider of workforce data, collaborated with The Economist on the report published this week, which included a look at nearly 90,000 job listings on large companies’ websites since the laws took effect in Colorado and New York City in November, and in California and Washington on Jan. 1. They found that 80% of postings included salary ranges that fell within a reasonable industrywide range.
“It goes against the grain of early understanding” based on media reports of “ridiculous” pay ranges, said Reyhan Ayas, a senior economist with Revelio Labs. She told MarketWatch that there seems to be a “level of distrust among the public” around the usefulness of the new laws, but the data shows most of the pay ranges being disclosed could be helpful.
Revelio acknowledged in its report that it has found some very wide pay ranges, such as these in New York: Société Générale SCGLY, -1.41% was offering $135,000 to $400,000 a year for a senior salesperson, and Netflix Inc. NFLX, +3.92% was offering $165,000 to $470,000 for security operations managers.
But the report stressed that posted salary ranges vary by industry, and that some of the wide ranges may be due to employees’ salary variation at the high and low ends of the range. Most industries’ listed pay ranges fell within reasonable ranges, which Revelio defined as a salary-range spread “that is lower than the spread between industry earnings at the 75th and 25th percentile.”
The industries whose postings showed the widest ranges in pay were utilities, manufacturing and management.
The report also shows that about half of job postings in California and Washington are already in compliance. Based on compliance so far in Colorado and New York City, which have similar laws, Revelio expects listings in California, 52% of which are now compliant, and listings in Washington, 45% of which are now compliant, to reach about 60% compliance.
Ayas said she expects that as the push for pay-transparency laws expands, more companies will include pay ranges in their job postings: “There will be a spillover effect, especially in a world of remote working.”