Trends and Considerations for US Employees and Employers
In this report, we analyze the state of pay transparency in the US, including insights from Intersectional Group’s 2023 Pay Transparency Survey. We also make recommendations to employees and employers navigating this dynamic landscape.
HOW PAY TRANSPARENCY CAN ENABLE PAY EQUITY AND SHED LIGHT ON PAY INEQUITY
Pay transparency is the practice of openly sharing information about compensation and salary (ranges) within an organization or industry. It may include making salaries public, providing information on how salaries are determined, and creating policies that promote fairness and equity in pay. The goal of pay transparency is to increase transparency and fairness in compensation, reduce wage gaps and discrimination, and create a more equitable workplace. Pay equity, or equitable pay, is a compensation system that is based on fairness and equality, and that takes into account the value of work performed, as well as the skills, experience, and qualifications of the worker. Equitable pay involves eliminating any biases or discrimination in compensation practices, and providing fair and equal opportunities for all employees to earn a living wage. This can involve conducting regular pay audits to identify and address any pay gaps, establishing clear and transparent pay policies and practices, and ensuring that all employees have access to the same benefits and opportunities for professional development and advancement.
State of Pay Transparency in the US
US EMPLOYEES WANT PAY TRANSPARENCY
Our 2023 Pay Transparency survey showed that 94% of respondents would vote for state pay transparency legislation, as do other sources including Viser (11) and LinkedIn (17). It’s no surprise that employees across seniority and industries (17) want pay transparency, which has the potential to address pay inequity (1, 3, 7). Our survey results identify pay gaps across ability status, race, and gender which are supported by data from the US Department of Labor Women’s Bureau (5), the Economic Policy Institute (15), and Harvard University (16).
PAY TRANSPARENCY LEGISLATION IS GAINING MOMENTUM IN THE US
More US employees are now covered by some kind of pay transparency legislation than ever before. But as you’ll notice in the below chart, not all pay transparency is created equal.
Additional legislation is pending in Massachusetts, South Carolina, and New Jersey. H.R. 1599, the Salary Transparency Act, was also introduced in the US House of Representatives in March 2023, which would require eligible employers to disclose wage ranges for open positions. While data suggests that such legislation does expand access to pay data, even in regions without pay transparency regulations (10), the full impact remains unclear. For example, pay transparency may lead to “flatter” pay across organizations and devalue important but intangible qualities such as cooperation (6).
CULTURAL DRIVERS OF PAY TRANSPARENCY
As Gen Z enters the workforce in growing numbers, their comfort with sharing pay information (11) and preference for companies that include pay in job listings (9) may encourage more employers to adopt pay transparency.
Additionally, unionization is increasing across US industries (2, 13, 14) which may increase pay transparency and pay equity as members of unions, which generally require pay transparency, earn about 20 percent more than their non-unionized peers (4).
PAY TRANSPARENCY MAY ENABLE IMPROVED SALARY NEGOTIATION OUTCOMES FOR EMPLOYEES
Only 56% of our 2023 Pay Transparency Survey respondents used pay data to negotiate higher pay, but 76% of that group achieved a positive outcome. However, the impact of pay transparency on negotiation outcomes may not be equal for all, with men more likely to ask for higher pay than women and women more likely to report that their request for higher pay was not met by the employer (8). This highlights how pay transparency alone may not ensure pay equity.
PAY TRANSPARENCY MAY PRESENT CHALLENGES TO EMPLOYERS
Like any major change, pay transparency will present challenges to employers. Potential challenges around pay transparency, as reported by management-level 2023 Pay Transparency Survey participants, include:
Highly competitive non-monetary benefits may not be enough to help companies remain attractive to candidates in some cases
Less flexibility in attracting talent, especially targeted recruits
Investments in education about new pay transparency policies, reasonable pay differences, and how leaders can communicate these topics is essential
Increased pay transparency systems support and maintenance costs
Addressing pay discrepancies takes time which can lead to employee dissatisfaction, tension, or turnover
Privacy concerns among employees
Negative exposure for employers that don't follow public EDI (Equity, Diversity, and Inclusion) and pay equity values
PAY TRANSPARENCY MAY ALSO HAVE POSITIVE OUTCOMES FOR EMPLOYERS
However, the outlook isn’t all bad for employers. Opportunities that pay transparency could enable were also shared by management-level participants via our survey:
Additional benefits may include attracting more and higher quality job applicants (18), controlling the narrative around pay (19), improving worker performance (20, 22), and reductions in some costs (21).
Summary
This report highlights the popularity of pay transparency among US workers and growing momentum of related legislation, as well as its benefits and challenges for employers and employees. Although pay transparency can support pay equity, it alone may not enable pay equity and should be used with other tools for maximum impact. Below are practical recommendations to help navigate the dynamic pay transparency landscape.
5 RECOMMENDATIONS FOR EMPLOYERS
5 RECOMMENDATIONS FOR EMPLOYEES
If you or someone you know has experienced an employer prohibiting salary discussions among employees, check out this article from the National Labor Relations Board. Here’s an email template that you’re welcome to use when contacting your representative.
Methodology
The 2023 Pay Transparency Survey, created by Intersectional Group, is a survey of US adults that are current or retired members of the US workforce. Participants engaged via a self-administered web survey and were recruited by Intersectional Group’s email list and by broadly-distributed posts on social and messaging platforms including LinkedIn, Instagram, and Slack. Respondents were incentivized to participate with a $1 donation to non-profit Voz Workers' Rights Education Project for every completed and unique survey response. Data from the 2023 Pay Transparency Survey that was published in this report was collected from January 25th, 2023 to March 1st, 2023. A total of 214 responses were collected.
Considerations
The 2023 Pay Transparency Survey sample size of 214 survey responses is relatively small given the diversity of identities and experiences shared, which prevented deeper analysis of some trends (such trends were not published in the report).
Certain groups were represented better than others in our survey respondents which could have impacted data quality.
2023 Pay Transparency Survey respondents skewed towards those with high compensation, with average compensation of $131,243 and median compensation of $113,000.
Several of this report’s contributors have used pay transparency to help mitigate pay inequity. These lived experiences could have impacted how the contributors approached the development of this report.
There could be additional factors that impact pay equity outside of pay transparency that should be explored in future research.
Acknowledgements
We wish to thank the following authors and contributors for their efforts in conducting and compiling this report:
Sponsor: Intersectional Group
Analytics: Latham Business Solutions
Design: Sarah Mulligan Williams
Events and training opportunities
We are hosting a Pay Transparency Report Webinar on August 16th to help folks further understand the initiative. Register here: Unpack The 2023 Pay Transparency Report
We are also planning to provide training for employees who seek support and advice on their journey to getting paid more equitably. Sign up to our newsletter for updates.
Download the PDF version here and share with your friends and peers.