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How do new state salary transparency laws work in this economy?

According to The Conference Board, wages and salaries rose at the fastest rate in more than 20 years in the first half of 2021. There are a number of things at play – not the least of which is the tight labor market, which is causing some employers to hire good candidates.

Meanwhile, this trend collides with another big change in the workplace: the increasing movement towards salary transparency.

“The hiring market is pretty insane,” said Michael Kerrigan, director of human resources at Interactive Brokers, a financial services company in Greenwich, Connecticut.

He said he was involved in more than 750 new hires this year.

“Salary negotiations seem to come much earlier in the process,” he said. “If you don’t interview someone quickly, hire someone, make a decision about someone, they’ll be gone.”

For Kerrigan, the job of negotiating salaries has just changed radically. This year Connecticut passed new law aimed at wage equity. It is one of seven states that have passed similar laws so far. Employers must tell  -plicants the salary range for the position in advance, if they ask. That aims to smooth the playing field, especially for women and people of color.

But Kerrigan said it made him keep up.

“If someone comes in and we really want them, we pay them the wages they want, and now we just change our range again,” he said. “Now we have to go back to that job and say the range is different.”

His company is now reviewing its entire pay structure every month, including offering salary increases to existing employees to keep them up to date with new hires.

David Lewis sees the same thing with many companies that have already reached their limits due to the myriad challenges of the pandemic.

“This is the greatest revolution that I have seen and probably will see in my life,” he said.

Lewis’ OperationsInc is also based in Connecticut but provides recruitment services to more than 1,000 companies across the country. The idea of ​​setting salary ranges for each job is uncharted territory for many of these companies.

“Most companies can safely say that Employee A doesn’t know what Employee B is doing – these laws change that,” he said.

Biota Macdonald, who lives in Connecticut, recently took a remote job in Chicago so she couldn’t take advantage of the state’s new wage transparency law. (Courtesy photo by Ian Macdonald)

A change designed to give job seekers an edge. Biota Macdonald lives in Connecticut, but she just got a remote job in Chicago so she didn’t benefit from the new law. She said knowing the recruiter’s salary range reassured her that she would not undercut during a stressful salary negotiation.

“As a woman of color, it was difficult for me to negotiate. But when I’m able to work out range in advance, I can see that it makes a huge difference, ”she said.

The competitive market gave her a boost. She said her salary and signing bonus offer earned her 70% more than the job she left. But of course she doesn’t know how that compares with her new colleagues.

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