Pay Transparency vs. Pay Equity

Pay transparency laws are increasingly being implemented to provide job applicants with information on salary ranges, which is thought to empower workers, particularly women and those who have been underpaid in the past. However, research suggests that this approach could inadvertently reduce overall pay levels, as employers may feel constrained to equalize salaries across their workforce, ultimately limiting salary increases. Studies indicate that companies embracing pay transparency often report lower average pay for similar positions. The complexity of pay equity goes beyond mere disclosure and involves numerous factors including job performance and unique skills, emphasizing the importance of thoughtful implementation in human resources practices.