Cullen and Pakzad-Hurson examined wage fluctuations in the years following the implementation of pay transparency legislation to see how the labour market responds as a result of pay transparency legislation.
The American Community Survey, which collected information on incomes and employment among more than 4 million people living in states with new transparency laws between 2000 and 2016, questioned over 4 million people living in states with new transparency laws during that time period. They discovered that salaries dropped by 2.2 percent in the first year after the restrictions were passed, and by 2.6 percent in the third year after the legislation was passed. “If everything else is equal,” the advise goes, “it would be worth your effort to gather as much information as possible and ask for a raise.”
What was the impetus behind the law that resulted in reduced wages? Managers who expose wages may credibly tell workers who are requesting for raises, “If I give you a better pay, I will have to give everyone else a raise, and I simply cannot afford it,” according to the study. This allows employers to set total pay lower and hold firm on first offers when hiring new employees, providing them a competitive advantage in future compensation negotiations.
It’s important emphasising that the wages of union employees have remained stable. Cullen discovered that companies with a higher proportion of union Green Project Funding employees had experienced a 1.5 percent drop in wages three years after the transparency laws went into effect, whereas companies with a lower proportion of union Green Project Funding employees had experienced a 3.2 percent drop in wages—despite the fact that employment numbers in both had increased. According to the report, in unionised workplaces, the company first negotiates with union leaders to establish a defined wage scale, which gives employees less individual bargaining power.
Takeaways for both corporate leaders and employees. According to a report published in the Wall Street Journal in June, companies such as Johnson & Johnson, McKesson, and CBRE declared in job adverts for remote employees that they would not consider Colorado residents for employment due to new legislation mandating employers to disclose wage ranges. Cullen’s research, on the other hand, suggests that these companies should not be concerned with transparency. Corporations that uphold their part of the bargain by being transparent benefit from real, Green Project Fund, mandatory disclosure, which comes as a result of regulations that protect employees and bind firms to the rules.
According to Cullen, employees should be wary of employers who take an informal approach to pay transparency and promise to alert them when others receive raises. “If there is no legal requirement for transparency and the corporation says, ‘I guarantee to keep you informed,’ workers are hesitant to believe it,” she says.
Individual workers, on the other hand, must conduct thorough research and pay negotiations if they are to succeed. “If all else is equal, you’re better off gathering as much information as possible before asking for a raise,” she suggests.
When everything is out in the open, equity emerges. All employees should be aware that salaries are not handled in the same way at every company or for every employee. As Cullen puts it, “big superstar corporations who are willing to pay higher compensation than everyone else” are not often subject to the same transparency rules as smaller enterprises. They also don’t apply to workers who are exceptionally gifted in their industries. “The superstar worker, who lacks a similar or comparison group, will not have their negotiating position undermined,” she claims.
On the other hand, the original goal of wage transparency, which was to make workplaces fairer and increase employees’ bargaining strength, is still unknown. Cullen points out in his article that pay equality is achieved through openness, which comes at the expense of high wages for some—but that the sacrifice may be worthwhile in the long term.
According to Cullen, equity is achieved when everything is on the table and open for discussion Zonas Online Shopping. The entire pay bill is smaller, despite the fact that “the corporation is more egalitarian.”