By: Hadassa Kalatizadeh
Experts say a new salary transparency law taking effect in New York City will spur a nationwide demand for pay raises.
As reported by the NY Post, the new law taking effect November 1st, forces NYC employers to specify the minimum and maximum salary for every job listing they post— be it a $15 per hour dishwashing job or a seven-figure tech job. The law aims to help job searchers to dodge applying for jobs that pay too little and to help narrow gender and racial pay gaps. Experts, however, warn that its biggest effect will be sparking many “tricky” conversations between bosses and current employees, according to Eli Freedberg, a partner at Littler Mendelson, an employment law firm. “When a current employee sees a new salary posted and they’re at the low end of the range, that’s going to raise some uncomfortable questions,” Freedberg told The Post. “This is going to have a tangible result in inflating wages of current employees.”
The new law only forces NYC employers to post salary ranges for job openings, but industry leaders say it will trickle down to the entire nation because other employers will want to be open to hiring remote workers who live in the five boroughs of the city. So, in effect, all jobs that may conceivably be performed in NYC will need to include salary ranges. Also, in 2021, the states of Colorado, Nevada, and Connecticut passed similar salary range laws. Other states including California and Washington are planning to add similar bills in the upcoming months. This will also help lead the salary ranges to become a standard across the country.
In some cases, the price postings may create unwarranted dissatisfaction. Remote workers who live in cheaper states may see what colleagues in pricier coastal cities are making and demand the same higher salary, explained Brian Kropp, a managing director at consulting firm Accenture. For instance, someone working in the financial sector in a small city in NC could demand a raise after seeing how much new hires are getting offered on Wall Street, Kropp told The Post. Near-record low unemployment and job vacancies have already pushed wages up with workers leaving their jobs for higher paying ones.
The circumstance has already been dubbed the “Great Resignation”. Long-tenured employees have been demanding higher pay after watching companies lure new talent at higher pay points. “Companies across the last year have increased the pay for their new hires in order to attract them on the labor market — but what very few have done is increase pay for their current employees,” Kropp said. Often current employees who make less money than the new hires don’t even ask for a raise, and jump right into “actively looking for a new job at another company,” he added.
The new law was already pushed back, as it had originally been set to take effect in May. It was postponed amid complaints from business groups including the Partnership for New York City. Kathy Wylde, the group’s president, told The Post she was grateful the bill’s implementation was delayed but said she was still worried it can hurt small businesses.
