3 ways salary transparency can help women get paid more and build wealth
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- Several states have passed laws requiring companies to be transparent about how much they pay.
- These laws make it easier for women to take control of their finances by knowing what their work is worth.
- Setting long-term financial goals becomes easier for women as pay transparency increases.
As a society, we're eager to chat about a lot of things when we're in the company of loved ones and friends. But one topic that's slowly becoming less and less taboo to bring up over cocktails or coffee is how much money you make at your job.
As people are getting more comfortable sharing their income with the people in their lives, more employers are also finally starting to be open about how much a job pays when they post open positions. Several US states have enacted pay transparency laws that requires employers to be upfront about the exact wages a job pays when they share open positions. That way, the person interviewing knows exactly what the salary is.
While the slow roll out of these new laws benefits everyone in the job market, one of the groups it especially benefits is women, who have historically been paid less than men. Lower pay for women means fewer financial opportunities, making long-term financial goals like retirement harder to achieve. I believe salary transparency can lead to higher salaries and more negotiating power for women in the workforce, and that means women have greater control over their finances.
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1. It lets women assess where they are in their career
When a woman accepts a job offer, the salary offered could be less than what would be offered to a man for that exact same role. On average, Payscale's Gender Pay Gap Report shows that women are paid 83 cents for every dollar that men make, a gap that becomes even wider for women of color. Because this information hasn't been widely accessible in the past, a lot of women might not even know they are getting paid less.
A woman's pay gap often compounds over the years, starting with the salary she takes for her first job. Just because a job change comes with higher pay doesn't mean it comes with truly fair pay, but that can be difficult to recognize.
For most people working at a company, they have no idea how much the people around them are getting paid to do the same job.
However, once employers open up and share what the exact salary is for a position they are hiring for, women at that company can begin to see if what they are getting paid reflects the value and experience they bring to the position or if they are severely underpaid.
2. It allows them to have negotiation power
Having this information can help women have a game plan for what to do next. They can either use this information to discuss a raise with their manager or apply for a role at a different company knowing what their salary should be. That can help them achieve long-term savings goals.
While many career coaches and recruiters will tell people interviewing for a job that they should also negotiate the final salary offer, women are less likely to do that. Glassdoor reports that 32% of women didn't negotiate their salary when offered a job, because they were afraid they would lose that opportunity.
When an employer displays a salary range for a role, I believe it reduces the need for negotiation and empowers women to aim for the upper end of that range if they do decide to negotiate. Even better, it puts more power in the hands of job candidates, who can know ahead of time what benefits come with a role they are going after, before they invest time and energy into the application process.
3. It's a step toward ending pay discrimination
When job offers are arranged behind-the-scenes between the employer and an HR representative after a candidate is chosen, it can be hard to detect or prevent any discriminatory pay patterns.
Transparency laws should make it harder for potential discriminatory or biased pay practices to occur, since job listings would share the pay for the position upfront. Eventually, this could lead to a significant reduction in the gender wage gap and allow women to finally receive equal pay for equal work.