Pay transparency laws were supposed to address the pay disparities that tend to impact women and people of color in the workplace. Over the last decade, 15 states have introduced laws that require varying degrees of disclosure from employers—from including explicit salary ranges in job postings to verbally sharing those details with prospective employees during the interview process.
But new research out of Cornell University indicates that those laws have not been as effective as intended—in part because many employers fail to truly comply with them.
These laws often do not clearly articulate how broad a salary range should be, and simply instruct companies to provide a “good faith” salary range. (The pay transparency law in New York, for example, states that at the time a job is posted, the range “must be the minimum and maximum annual salary, or hourly rate, the employer believes, in good faith, they are willing to pay.”) As Fast Company has previously reported, this means some employers provide broad salary ranges that technically abide by the law, but are of little use to job applicants.
Cornell’s findings show that these wide salary bands can have the exact opposite effect than was intended by advocates of pay transparency: Across four studies, researchers saw significant variation in the breadth of salary ranges—and a clear pattern of women preferring jobs with narrower salary bands compared with their male counterparts. So even as pay transparency laws have sought to put all applicants on even footing, women are often discouraged from applying to jobs with wide salary ranges, reinforcing gender-based pay gaps. But it turns out that women face obstacles even when they opt for jobs with narrower ranges.
“In terms of the implications of this work, those that applied to narrower pay ranges then negotiated less assertively,” says Alice Lee, the new multipart study’s lead author and assistant professor of organizational behavior at Cornell’s School of Industrial and Labor Relations. “If women are sorting into jobs with narrow pay ranges, that is then constraining their likelihood to negotiate assertively for a higher salary—and these policies that are intended to mitigate these gaps might be actually perpetuating these gaps.”
Lee’s research team conducted a collection of studies to understand the effects of pay transparency laws. In an analysis of nearly 10 million job postings, they found a broad spectrum of pay ranges. Two following studies looked at how applicants responded to different job postings, along with how they negotiated when they started interviewing. A final study tested out a few interventions that the researchers thought might encourage women to apply to jobs with wider ranges.
There were a few things that did seem to make a difference for female applicants—namely, being more transparent about how compensation was determined in the original job posting. “We just included some clarifying information to the job ads in addition to the pay ranges we provided,” Lee says. “It was just two sentences that informed applicants of the typical starting salary, as well as sort of the qualifications and the system through which pay is determined. … For those that saw the job ad with this clarifying information, women applied just as frequently as men to jobs with wider pay ranges, and we also saw no gender gap in negotiation behavior.”
As Fast Company has reported, overly broad salary ranges have been a recurring issue in states that have enacted these laws. The language of these pay transparency laws leaves room for interpretation, and many employers are not particularly incentivized to volunteer more information than necessary. (Pay transparency laws could impose stricter limits on salary bands, as is the case in states like New Jersey—though this might be a tough sell in regions where corporate interests hold more sway.) The state agencies that enforce these laws tend to prioritize the most flagrant violations—employers who openly flout the law and do not disclose any salary range, for example—which means there are fewer repercussions for companies that effectively try to get around the law by posting unhelpful salary ranges.
In New York City, for example, the New York City Commission on Human Rights brought 33 complaints against a variety of employers in the year after the city’s pay transparency law took effect in late 2022. But the vast majority of those complaints focused on companies that had neglected to include any salary information in their job postings. While the agency did bring a handful of complaints against companies that used very broad ranges, Fast Company’s reporting found that there were other major employers who posted jobs with salary bands that spanned about $100,000.
Employers have their reasons for posting wide salary ranges. Many of them want to stay competitive to attract the best talent—which can mean leaving some room for negotiating compensation, even if that might exacerbate pay disparities. Sometimes companies don’t have a clear compensation strategy and scramble to come up with an appropriate salary band, which is especially likely for AI roles that are in demand and can command high salaries.
But companies can send the wrong message when they use broad salary ranges—in turn alienating prospective employees. Lee says there is an element of risk aversion that also plays into why women are more likely to steer clear of broad salary ranges. Job applicants may also make assumptions about how much a company values equitable pay practices or the importance of diversity, equity, and inclusion more broadly. “If a company cares about [diverse talent]—which I think, personally, all companies should—then they should absolutely care about what their pay ranges are signaling,” Lee says.
For employers who purport to care about pay equity, Cornell’s research suggests that employers only need to take a few steps to embrace the spirit of these pay transparency laws. Providing even minimal context on how compensation is determined—along with a typical starting salary—goes a long way. The researchers found that women responded positively to relatively basic language, which noted “your exact offer will reflect your relevant experience, skill level, and the responsibilities of the role, in line with our standardized compensation guidelines.” In some cases, Lee says, it might make sense for a company to use a large salary band, but outline specific pay tiers within that range, based on experience and qualifications.
Lee points out that these laws do give workers an opening to ask more questions about compensation and advocate for themselves. But ultimately, it’s the companies that hold a lot of power in those negotiations, regardless of legal protections—and many of them may not even be aware of the message they are sending to prospective employees.
“I do think—I hope—that some employers do truly care about attracting [diverse] talent, and you might be constraining and preventing many of those people without even knowing so,” Lee says. “I think these findings might come as a surprise to some people.”