On November 1, New York City’s new pay transparency law went into effect, requiring job ads to include salary ranges. The goal is to reduce inequalities in compensation, especially for women and workers of color. The law follows similar initiatives for job listings in Colorado and the European Union, as well as many other laws that require salary information once applicants reach the interview stage.
And while workers and jobseekers will benefit from a clearer understanding of how their pay lines up with those doing similar work, there’s an added benefit for economists: new numbers to play with!
We took Lightcast job posting data and compared how many NYC job ads included salary data in November to postings throughout the year. The percentage of jobs advertising salary nearly doubled after the law went into effect—going from about 28% to 49%. Of course, that’s still pretty far from 100%, so there’s fall from full compliance in New York in the first few weeks (employers have until 30 days after their first violation before being hit with a fine).
Many were concerned that businesses would try to wiggle out of the law’s requirements by posting super-broad salary ranges, and there were several reports of this happening, but that’s not what we see in the data.
On average, the band of pay ranges (maximum minus minimum salary, measured as a proportion of the minimum) increased from 27% to 31%, indicating that ranges are expanding but media reports are overhyping the extent of the cheating.
There are more discoveries to be made as we continue studying the impact of the New York law as time goes on, but I’ll leave it there for the time being—we’re only 10 days into this experiment, after all. Instead, I’ll point you to a related paper this week from me, Jonathon Hazell, Christina Patterson, and Heather Sarsons: “National Wage Setting.”
The main takeaway from our research here is that firms are very likely to set the same wages for jobs done all over the country, even though local job markets vary quite a bit nationwide. Besides just Lightcast job posting data, our research also includes a survey of HR leaders, over a third of whom said that it’s inefficient to tailor compensation to specific locations, so they just set one salary for the whole company.
This can be an advantage for workers in places with lower costs of living (rural areas, for example). It may also lead to another consequence of the New York law, in that workers can extrapolate that wage information to jobs all over the country. Like the old song goes: if you can make a certain salary there, you can make it anywhere.
If you’re still curious and looking for even more research on the impact of disclosing salaries, I also have a paper from August on what happened when pay transparency came to Colorado, which I briefly wrote about here when it came out.
Economic News
I was very encouraged by what this morning’s Consumer Price Index showed about inflation. Overall, prices rose 0.4% in October and are now up 7.7% over the past twelve months. Those numbers were better than what economists were expecting, and significantly below inflation’s peak (8.9% annually) in June. Core inflation—all items except energy and food—rose by 0.27% in October, much less than the 0.58% we saw in September.
We saw lower rates of inflation month over month in food, gas, utilities and electricity, new and used vehicles, medical care, and transportation. The only increases were in fuel oil and shelter.
So while prices are still rising, they’re rising much more slowly, and that will relieve some of the pressure on the Federal Reserve in its ongoing fight against inflation. The decline shows that the Fed is on the right track, and I hope this means they hold steady with their policy. Overall, this is good news.
Until next week,
Bledi Taska
Lightcast Chief Economist