Why pay transparency needs to be part of your recruiting strategies

The push for pay equity has been a hot topic in the workforce for decades, but legislation changes and recruiting demands may finally force employers to pull back the curtain on their compensation strategies.

Twenty-seven percent of Americans believe employers should provide pay transparency in job postings, according to a recent hiring report conducted by software company beqom. And 61% are more likely to apply to a job that shares a salary in the job posting.

While the topic has always been taboo, the conversations don’t have to be, says Jeanniey Walden, chief innovation and marketing officer at DailyPay. Rather, pay transparency should be seen as a tool to ensure your employees feel heard and supported in and out of the office.

“The reason [employees] are coming into work is to get paid,” Walden says. “People come to work because they need to make money to take care of themselves and their family and companies have to maintain the trust between the company and the employee.”

Read more: How a remote workforce will change your compensation strategy

As employers look to recruit, this is a necessary practice, especially when it comes to attracting female employees back to the workforce, Walden says. Women often suffer the worst consequences when pay remains undisclosed. In 2020, women earned 84% of what men earned, according to a Pew Research Center analysis of median hourly earnings of both full- and part-time workers. Women know this inequality exists, but have limited options when it comes to discussing it.

In her own experience, it wasn’t until six years after she left her first job that Walden found out her male colleague — who had the same prior work experience as her — was making twice as much as she was in the same position.

“I just immediately felt like oh, I'm a woman so they paid me less,” she says. “So when these conversations start coming up, companies need to take them very seriously because your employee base feels like they've put their trust in you and that you've mistreated them and slighted them.”

Companies are perpetuating the problem by either discouraging pay transparency discourse among employees or are playing into inequitable hiring practices that promote applicants to receive a lower base pay, all tactics that disproportionately affect women, Walden says.

Read more: Men are in the dark about pay equality

Fortunately, these are problems recent legislation is trying to address. In 2019, Colorado passed their Equal Pay for Equal Work Act, which prohibits salary discrepancies based on sex, and requires companies to disclose the reason behind higher or lower salaries between men and women. New York recently banned employers from asking employees their compensation history, which has been used as a means to propagate pay inequity.

While this legislation is an important step, it’s only one part of a much broader conversation around pay transparency and equity, according to Walden. Employees aren’t settling for companies that aren’t transparent about their pay, and companies that wait for legislation to force their hand will be left behind.

“These discussions around pay transparency in the workforce can make or break company culture,” she says. “So I think a lot of companies are going to be revisiting those pay equity policies because if employers are not demonstrating authenticity in the workplace, it’s going to be a challenge to attract anybody.”