Should you let workers know the salaries you pay?

It’s a debate that goes all the way back to whether you should tell Fred that Barney gets two more clams than he is as a Bronto crane operator at Slate Rock and Gravel Company:

Should you be open with your employees about their salaries — or keep it quiet?

A new law in New York City requires employers with four or more workers (in good faith) to disclose the minimum and maximum annual salary or hourly wage the employer believes it would pay when they post a job opening. Or a promotion or transfer opportunity.

Why this law?

Matt Kerzner, director at the Center for Individual and Organizational Performance at accounting firm EisnerAmper, explained to Fast Company that “Equal pay for equal work … is still a problem, and this new law addresses the ‘equity’ in ‘diversity, equity, and inclusion.'”

The reality is different.

Citigroup, for example, listed multiple job openings ranging between $0-$2 million. So that’s some minimum and maximum!

After the fact, Citigroup blamed a computer error; here it is, 2022, and people still blame the computer for what was clearly a human mistake.

The revised salary range is between $59,000 and $149,000.

While that’s not as ridiculous, I also can’t take it seriously. I mean, who offers jobs with a $90,000 salary range between the top and the bottom?

When I’ve looked for jobs, I’m very aggressive. I’ve asked for and gotten 30% jumps from an initial offer to what I finally ended up getting.

But this? This is not a serious good-faith salary range.

I shouldn’t pick on Citigroup. Others, such as Amazon Web Services and Deloitte, are advertising jobs with close to 100,000 salary ranges.

I see court cases in these companies’ futures. Lots and lots of court cases.

That phrase “good faith” will be at the heart of many lawsuits.  

This isn’t just a New York City issue.

Salary transparency laws requiring salary ranges in job ads are already on the books in Colorado. In 2023, California and the rest of New York State will have such laws. However, these laws are not all the same.

For example, the New York City law doesn’t cover health insurance, time off, severance pay, overtime pay, commissions, tips, bonuses, stock offers, or 401(k) plans. (Others do cover benefits as well.)

The moral of the story is no matter where your business is; you need to be ready to be upfront about your salaries.

For example, even if you’re based in Boise, ID, but you have a remote worker in Manhattan — the new New York City law covers you, too.

I know many owners and managers hate salary transparency. You might say, for example, there’s a big difference between a “10x engineer “and a run-of-the-mill engineer.

But hey, you know what? There is.

While the idea of someone being ten times better than an average performer is more hype than reality, some people are much better than others and should be paid more.

In that case, that’s what you should be advertising for. You don’t want any wet-behind-the-ear technician; you want an A+ tech with five years of experience.

If you want a great worker, say that and offer a salary to match.

If you luck out and hire an ordinary worker, but you get someone who turns out to be fantastic, then promote and give them a raise; let them work from home; or give them a special parking spot.

You know the drill. Reward your stars. 

Keep in mind that prospective workers want realistic salary estimates.

For example, why would anyone apply for a job if they knew in advance it wouldn’t pay them enough to be worth their time?

This also allows you to think about your salaries. If you can’t justify and defend the logic behind what you pay your employees, there’s a good chance you’re relying on your gut and not your financial sense for salary decisions.

That is not a good, long-term business plan.

Besides, employees do eventually learn what everyone else makes. Of course, you can’t stop office gossip. But, if you’re upfront about it, you can reduce gossip’s damage.

And, even if they don’t compare notes on Slack or at lunch, so what? Sites like Glassdoor, LinkedIn, and Dice make it easy to determine what people are actually getting paid.

So, rather than fight the change that’s coming, get ahead of it.

Work out a policy on honest, transparent salary offers. Tomorrow’s employees will thank you. People are making fun of companies that attempt to disguise salaries. You don’t want your business to be laughed at.

If that’s happening, you can be sure you won’t get top-grade employees.