‘People Work for Money’: Pay Transparency Is More Important Now Than Ever
After endless hours of swaddling/feeding/rocking my baby daughter into submission, I spent the precious little downtime I had during maternity leave in 2021 and 2022 hunting for a new communications job.
Before my mat leave, I was stagnating in my old role. Bored and undervalued, I needed a fresh challenge and a fatter paycheque. (Babies are expensive! Toronto is expensive! Life is expensive!) I had a number in mind, with a bunch of beautiful zeroes dancing at the end. But the lack of salary ranges on most job postings transformed my search into the most absurd of exercises; a joyless carousel of mutually wasted time.
Whenever I asked about money during a job interview (still weirdly considered taboo at many workplaces), the interviewer would turn the tables: “What salary range are you looking for?” I’d name my price and was told what I had in mind was outside of their budget. That meeting could have been an email, as the kids say.
But wasted time is probably the least concerning aspect of pay opacity; it disproportionately puts women and people of colour at a disadvantage—research shows it reinforces pay discrimination—and leads to financial disparities at workplaces and across entire industries. New federal and provincial policies are only just beginning to tackle these deep-seated problems.
As of June 1, federally regulated private employers in Canada are required to record new salary information and report aggregated pay-gap data. Employers in Prince Edward Island are now expected to include salary ranges in public job postings and are prohibited from penalizing workers for talking to each other about their salaries. In British Columbia, consultations for a new pay transparency bill are also underway.
Changes are happening more rapidly in the U.S.: New York City is in the process of enacting a law that requires employers to share salary information with job postings (it’s already the law in Colorado), and Microsoft recently said it will include pay ranges in all of its U.S. job listings.
“People are demanding pay transparency,” says Toronto-based HR expert and career coach Allison Venditti, founder of parent advocacy groups Moms at Work and My Parental Leave. It saves time and money for all involved, says Venditti, and also helps tremendously with retention: A recent report found that more than half of employees would consider switching jobs for more pay transparency, signalling its importance when it comes to cultivating loyalty in the workplace.
Why we need pay transparency
According to the Canadian Women’s Foundation, women earn 89 cents for every dollar earned by men. Some of this is due to occupational segregation; lower-paying jobs are more frequently held by women (including the “five Cs” of cleaning, catering, clerical, cashiering and childcare). But the wage gap can also be attributed to discrimination, time spent doing unpaid domestic labour such as cooking or child-rearing, and the fact that women are less likely to ask for raises and more reluctant to negotiate for higher salaries than men.
Additionally, racialized Canadians with university educations make, on average, 87.4 cents on the dollar of their white peers and racialized women earn a staggering 59.3 per cent less than a white man is paid. “Women and POC are underpaid across every single industry,” says Venditti, adding that while companies may put together a diversity, equity and inclusion plan, many organizations are slow to address pay gaps. “If we are not willing to talk about equity in pay, then I am really uninterested in the discussion. People work for money.”
In Ontario, the Pay Transparency Act, or PTA, received royal assent in 2018, weeks prior to Doug Ford being named premier of the province. The PTA’s aim is to help eliminate gender bias in hiring and help close the wage gap by requiring employers to list salary ranges on public job posting. It would also require workplaces with more than 100 employees to create “transparency reports” that detail differences in compensation between men and women. Four years later, the act languishes on the back burner of the Ontario legislature and is yet to be enacted.
But why do we have to wait on laws essentially forcing companies to disclose salaries and salary ranges? Why don’t companies voluntarily share this vital information? Venditti is blunt: “Because they don’t have to.” It seems pretty clear that companies don’t share information so they can continue to pay employees as little as possible. By asking the candidate for their salary expectations instead of offering a range that the company has budgeted for, employers bank on workers undervaluing themselves, and rarely do they say to a candidate, “That’s lower than our budget, we’ll give you more.”
Why pay transparency may become more common
Just as the pandemic has rewritten outdated rules and attitudes around hybrid and remote work, there’s a sea change on the horizon when it comes to pay transparency. The Great Resignation is here and attrition is expensive. (Data shows that it costs at least $4,000 to hire a new employee and every departure costs a company anywhere from $6,000 to hundreds of thousands, depending on the employee’s seniority and salary.) Given labour shortages and the fact that we’re in a job-seekers’ market, “no one is going to sit through three interviews only to find out the job pays $30,000 less than their current role,” says Venditti. And for employers looking to fill the gaps left by retiring Boomers, a report concluded that 70 per cent of Gen Z workers would leave a company for one with salary transparency.
Progressive businesses should not wait for pay transparency to be mandated. It’s advantageous to adopt it now. Not only does pay transparency help attract top talent, it can help close the wage gap, and positions a company as a leader in their industry and makes them more attractive to job-seekers. It builds trust and leads to less attrition.
In the meantime, the holdouts are running out of goodwill from prospective employees like me. “If your employees really are your most valuable asset,” Venditti says, “it’s time to start showing them.”