A new Washington law supporting wage transparency will benefit workers and, overall, the companies that pay them. While there might be some unintended consequences, requiring the inclusion of a salary range with a job listing seems sensible.
Senate Bill 5761 passed the Legislature this year and was signed by Gov. Jay Inslee. It was supported by all Southwest Washington Democrats and opposed by local Republicans.
The law, which takes effect in 2023, requires employers who have 15 or more workers to disclose a salary range upfront in print or online job postings — along with general information about a position's benefits. Postings for internal transfers also must include a wage scale or salary range.
State Sen. Emily Randall, D-Bremerton, told Crosscut.com: "It's not fair and equitable to lowball folks, or to hide the ball in recruiting when not everyone comes with the same resources. Folks would know whether it was a good fit for them, and whether it was something they could support themselves and their families."
Cher Scarlett, a Kirkland-based software engineer who advocated for the bill, said: "Unless you know what the top and bottom of a pay band is, it's very difficult to get really what you are worth."
Advocates hope the new law helps close pay gaps for women and people of color. If the wage scale for a new hire in a similar position is publicly posted, it will be easier for people to know if they are underpaid compared with their peers. It does not require knowledge of each employee's salary, but it allows for better comparisons.
Employment experts say that tends to make employees more productive and collaborative. Elena Belogolovsky, who authored a 2016 study about the issue while at Cornell University, told Time magazine: "If I don't know my co-worker's pay, I assume that I might not be getting paid as much, and I decrease my performance. When people don't know each other's pay, they assume they are underpaid."
From an economic standpoint, salary transparency is an important part of a true free market. Perfect information leads to perfect competition, the theory goes, providing a foundational aspect of capitalism. If workers have a better idea of what other companies pay, they can make better decisions for their futures and force corporations to compete for the best workers.
Business groups opposed the bill when it was under consideration. Bruce Beckett, a lobbyist for the Washington Retail Association, testified against it and now says, "It's passed, and everybody will do their best to comply with it. But there's zero guidance. That's part of the problem."
Therein lies the danger. An idealistic Legislature in recent years has passed bills relating to police use of force and long-term care that later required lawmakers to amend the legislation and fix flaws that had been overlooked. In this case, there are no guidelines for what constitutes a "salary range," and critics worry that public knowledge about previous salaries could hamper those seeking new jobs.
But there is good reason that Washington is following in the footsteps of Colorado and New York City, which have implemented similar laws. And there is good reason other states are pursuing such legislation.
Transparency in the wage scale for a new job will save time and effort for both employers and employees, and it will enhance the power of workers in the job market. That will be beneficial for the economy as a whole.