These Laws Were Intended to Help Correct The Pay Gap, But They’re Backfiring
A new study shows that broad pay ranges in job postings are linked to fewer female applicants.
Over the last few years, more than a dozen U.S. states have enacted pay transparency laws which require most employers to include a salary range in job postings.
The laws are designed to address persistent gender pay gaps. However, new research published in the Journal of Applied Psychology has found that because the pay ranges listed are frequently so wide (sometimes tens or even hundreds of thousands of dollars), they have inadvertently deterred women from applying for jobs. According to the research, women have a stronger preference for jobs with narrower pay ranges.
Listing a narrow salary range had another unintended impact, the researchers found: When a job posting had a narrow salary band, women either negotiated less assertively and accepted a midpoint salary offer, were less likely to negotiate at all, or asked for less money.
“This matters because starting salaries have compounding consequences,” said Alice Lee, assistant professor of organizational behavior at Cornell, and the lead author of the study. “Raises, bonuses and future opportunities are often tied to your initial salary, so a lower starting point doesn’t just affect your first paycheck. It ripples through your career.”
Josie Cox
The research was based on nearly 10 million U.S. job postings and several experiments with both prospective and actual job seekers.
So if a wide salary range discourages women from applying to jobs and a narrow range impacts how much salary they will negotiate for, what’s the solution?
The report’s authors point out that pay transparency can be a useful tool in helping to narrow the gender pay gap, but that the approach by many employers should be different.
They recommend that employers should provide explicit information about the typical starting salary and the criteria used to determine final offers. “When that information was provided, we no longer observed the gender gap in application decisions, and it also eliminated the gap in negotiation behaviors,” Lee said.
“Pay transparency laws represent meaningful progress, but transparency alone isn’t enough,” Lee said. “How employers present pay information matters just as much as whether they disclose it.”
