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Pay transparency, even as fewer employers plan to raise salaries this year, remote work is on the brink, and new pay transparency laws are required in more states. continues to face resistance.
These are the findings of a new study by PayScale, which looked at compensation across the industry, and the results aren’t very encouraging.
According to the researchers, “employers currently have an advantage in the job market, at least for white-collar salaried workers.”
It’s time to lower your expectations
Many workers who were hoping for a pay increase to cover expensive groceries, gas and rent are out of luck. The report found that only 79% of organizations plan to give raises this year, down from 86% in 2023 and the lowest in years.
The average base increase rate in 2023 is 4.8%, the highest level in the past 20 years, but this year’s base increase rate is expected to be around 4.5% on average, which is lower than the current inflation rate of 3.2%. Slightly higher.
The report, conducted between November and December on more than 5,700 employers, primarily based in the U.S., found that employers have struggled to fill positions over the past few years, offering higher wages and more space. It’s a reality check for workers who have become accustomed to bargaining for flexibility. .
Some workers showed dissatisfaction and walked out the door, but this take-it-and-get-it approach lost steam. Almost a third of organizations believe they are losing talent due to insufficient pay increases, which is significantly lower than 41% last year. And employers seem to be taking this positively.
According to PayScale data, the voluntary turnover rate will drop from 25% in 2022 to 21% in 2023, well below the 36% rate in 2021.
Remote workers are less likely to quit
Nearly 60% of organizations describe their office environments as traditional or hybrid. This means that all or most employees must live within commuting distance of the office, even if they work from home part of the time.
Meanwhile, workers seeking flexibility in where they work are losing ground. In-person work has increased to 31% from 27% last year, and hybrid work has decreased from his 31% to 26%. Only 11% of employers offer a fully remote working environment, unchanged from last year.
But for determined remote workers, this isn’t the end of the game. Employers are realizing that in-person work requirements are having an impact. “Organizations with traditional workplaces tend to have higher voluntary turnover rates than employers that offer hybrid or remote work,” said Ruth Thomas, pay equity strategist at PayScale. .
The voluntary turnover rate for traditional in-person work is 30%, nearly double that for remote companies and hybrid work environments.
resist disclosing salary ranges
By the end of last year, about one in four workers nationwide was covered by state or local laws that require companies to be transparent about salary ranges in job postings.
According to PayScale data, 6 in 10 employers share salary ranges in job advertisements. This is a 15% increase over last year. However, many do so reluctantly, and many simply ignore the rules.
Telling someone how much you make is often a taboo topic at work and among friends, and employers want it to remain that way. Most organizations “do not encourage the sharing of individual salaries” among colleagues, he told researchers.
That’s because when the conversation turns to paying money, it’s likely to ruffle feathers. More than a quarter (27%) reported that employees have asked more questions about their pay, and 14% have asked employees more questions about their pay because they saw a higher-paying job posting elsewhere. has left the organization.
What’s behind employers’ aversion to pay transparency? According to Lulu Seikaly, senior employment attorney at PayScale, the first reason is that nearly half of employers are That means it costs a lot of money to develop compensation strategies and formal pay structures. The second reason is the desire to keep salary information private from competitors.
“But with more states proposing and passing pay transparency laws, employers can’t hide anymore,” she says.
More than a dozen Washington state employers, from Albertsons to Adidas, are facing a pending class action lawsuit alleging they failed to include salary ranges in job postings required by a new state order that took effect in January 2023. There is.
The Washington law applies to companies with 15 or more employees that post job openings on their company careers page or on third-party job sites such as Indeed or LinkedIn. Companies must also provide current employees, upon request, with a pay scale commensurate with their job duties.
The purpose of the Pay Transparency Act is to close gender and racial pay disparities by providing pay information that helps job seekers understand how much they can negotiate and evaluate job openings. It makes it difficult for employers to use past salaries as a guide. What do you pay?
“So it’s a little bit of the Wild West, where the government tells them to make the salary range public and they say, ‘Oh, I don’t know,'” said Amy Stewart, PayScale’s associate director of content and editorial. That means,” he added. If we want to. ”
That attitude can come back to hurt them. When it comes to pay transparency, a study by the Human Resources Management Association found that 70% of organizations that list salary ranges in job postings said that disclosing salaries increased the number of applicants; Respondents say the quality of applicants has improved.
“The impact of pay transparency goes far beyond the law itself, influencing job seekers’ behavior in deciding which jobs to apply for,” Thomas said. “This has a direct impact on organizations attracting and retaining top talent. Companies seeking the best talent must adopt transparent pay practices, or their growth and You will be at risk of continued reputational damage.”
ignore the wage gap
And surprisingly, more than a quarter of employers aren’t concerned about closing racial or gender pay gaps. When researchers at PayScale asked what organizations were doing to address severely underpaid employees, they largely went unanswered until someone pushed back. Ta.
“Surprisingly, we found that 27% of companies are only passively dealing with those employees,” Thomas said. “That’s when employees and their managers ask, ‘Why am I not being compensated fairly?'” That’s a pretty significant number. ”
Kelly Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 of her books, including “The World’s Best.”Taking Control Even Over 50: How to Succeed in the New World of Work.” and “You’re never too old to get rich.” Follow her on X @Kellyhannon.
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