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Mercer associates are being asked, “Why do I need salary surveys if companies are going to be posting pay ranges on job boards?” The thought is that with pay transparency laws requiring employers to disclose pay ranges when recruiting or when asked by employees, HR will now have that data readily available.
Let’s look at why relying on job posting for pay information ── and abandoning your market pricing methodology ── would be challenging.
Simply put, pay transparency laws will require employers disclose pay ranges (or other salary information) to either job applicants or current employees. The requirements vary by state, with some requiring more transparency than others, particularly for companies that operate nationwide. The approach to pay range disclosure is likely to accommodate the most stringent requirements because we anticipate that those requirements will become more widespread.
Below is a sampling of some pay transparency laws passed by a small selection of states. In addition, there are disclosure and reporting laws that require employers to report certain pay data to the government.
So far, it seems like there is little to no consistency in what employers are sharing. The various legislation that’s been passed has left a lot up to interpretation in terms of what needs to be posted or shared. Some employers are planning to share their full pay range, while others are only sharing a portion (e.g., minimum to midpoint, or first quartile). The inconsistency makes it hard to compare and aggregate data in order to develop an understanding of the going pay rate.
A search of Indeed.com in February 2023 for Accountant in California revealed just how different the pay ranges posted can be. We found pay listings from $22 per hour to $124,920 yearly salary.
Admittedly, if you were to scrutinize the job responsibilities and qualifications, and you were to adjust for geographic differentials within the state, you may be able to find postings with more similar pay ranges. That seems like it would take quite a bit of effort and probably not something you are prepared to attack with AI, at least not at this point.
Continuing with our example, an employer has the fairly traditional range displayed below for a job such as “Accountant I” and their policy is to hire in the bottom quartile, although they do make exceptions.
What might they include for a pay range in a job posting? Any of the below options might be considered reasonable and in compliance with the law in their state.
As you can see, the First Quartile is significantly different and conveys a lower pay range for the job than the other two options.
The employer could disclose the full range $48,000 – $76,800 or perhaps a range around the midpoint that they have identified as “market competitive.”
Additionally, the example above uses a traditional salary structure range, but not all companies use something like that to manage pay. If a company uses market reference points or broader ranges, or perhaps doesn’t use pay ranges at all, then what they include in job postings is bound to be different.
As an outsider reviewing job postings from another company or other publicly available pay range data, you’re unlikely to be able to tell what exactly the range represents. Without that information, it’s impossible to use the data effectively when making pay decisions for your own company.
While base pay is the foundation and must be competitive, it’s only part of the total rewards package. Employers will be revealing one element without context — what portion of the total rewards package and overall experience does it represent? Setting base pay without understanding the value of total compensation, never mind total rewards, is a mistake. Mercer’s salary surveys typically provide you with elements beyond base pay, although you may have to rely on other sources to get the full picture on employee experience elements such as flex working (we’ve got a survey for that too).
While the world and labor market seem to be a bit of a roller coaster lately, take comfort in the fact that you always have support — whether in the form of data or a trusted advisor — from Mercer. We thrive on helping you build a team that is motivated to help your company thrive. Our consultants are waiting to help you navigate your talent challenge
Give us a call at 1-855-286-5302 or email surverys@Mercer.com