In the brave, newly transparent world for New York City job seekers, many will still be left wondering: Wait, how much does this role really pay?
Employers are testing the limits of a new city law requiring salary ranges on job ads by posting pay bands that, in some cases, span more than $100,000, according to a Bloomberg News analysis of over 400 open roles.
A field operations manager at VerizonCommunications Inc. in Brooklyn, for example, could earn a starting salary anywhere from $92,000 to $171,000. For a New York City-based compliance director at Wells Fargo & Co., the range spans $173,300 to $359,000 — a difference of over $180,000. At International Business Machines Corp., the potential salary for a technology engineer runs from $73,000 to $152,000, more than double, according to postings on company web sites and the job site Indeed.com.
As employers in New York City adjust to the fresh regulations, many listings are leaving applicants more confused than ever. In some of the pay ranges reviewed by Bloomberg, the lower end of the salary band is less than half of the suggested maximum.
“It begs the question: ‘How do I know really what this job pays?’” said Nancy Romanyshyn, a director at Syndio, which makes software that helps companies eliminate pay disparities.
The new law requires all companies with four or more employees to produce a “good faith” salary range for jobs in the city of 8.5 million people. It defines a “good faith” estimate only as what the employer “honestly believes” they are willing to pay a successful applicant. For the most part, compensation experts admit such things are much more art than science.
Bloomberg gathered a cross section of more than 400 new listings across about a dozen large employers in New York City to see how they’re interpreting that mandate. The approaches vary, as do the width of pay bands.
Companies such as Bank of AmericaCorp., JPMorgan Chase & Co., Alphabet Inc.’s Google, ComcastCorp.’s NBCUniversal and CitigroupInc. had fairly tight ranges for the jobs reviewed by Bloomberg, with minimum salaries that were 60% to 80% or more of the maximum in many instances. Citigroup and Google, which have started posting salary ranges for all US jobs, appeared to use a specific ratio to set their ranges, while JPMorgan’s and Bank of America’s ranges were less uniform.
Others, including Verizon, Wells Fargo and IBM, opted for wider ranges, with many of the minimum starting salaries coming in at half or less of the maximum. Verizon consistently posted a top-end salary that was about 1.85 times the lowest end of the range; on Amazon.com Inc.’s listings the high end of the range was almost double the low end, typically.
The New York City Commission on Human Rights, which enforces the NYC rules, didn’t return a request for comment on how it will evaluate the pay ranges. Companies face fines of up to $250,000 for non-compliance.
In Colorado — which has a similar pay law — companies face potential enforcement for posting pay ranges with unrealistic starting salaries, like a penny, or not having ending salaries, said Scott Moss, director of the division of labor and statistics at the Colorado Department of Labor and Employment. No one has been fined for that yet.
Employers and employees are increasingly at odds as large swaths of the workforce are resisting returning to the office after several years of working successfully from home during the pandemic. Job openings and the number of people quitting both are off recent peaks, but Friday’s jobs report showed that hiring is still strong, payrolls increasing by 261,000 against a median estimate in a Bloomberg survey of economists that called for a 193,000 advance in payrolls. Wages also rose.
With the new pay transparency requirements, not only can an employer fail to attract new talent it needs, but a poorly planned range can mean existing employees jump to companies who are handling it better.
Internally, companies generally have pay ranges in mind for open roles. But now potential recruits are seeing that decision-making process in public — often for the first time — warts and all.
Though employers have had months to prepare, discrepancies and glitches are inevitable as businesses adjust to enforced pay transparency after decades of secrecy. Many executives are split as to whether to present their full pay range, as it exists internally, or a smaller subset for public consumption, said Justin Hampton, founder of Compensation Tool, which compiles and analyzes salary data. They’re also worried that existing employees will see a range and be upset, and that prospective candidates will all expect the maximum pay.
JPMorgan, Bank of America, and Citigroup had no comments on their methodology. Google cited guidelines on its corporate web site explaining pay ranges are set nationally and individual pay is influenced by factors such as experience and relevant education.
Many other companies are also likely to be presenting a national figure that tries to account for all possible circumstances, Romanyshyn said. Nuance doesn’t enter the equation until later in the process. Human resources departments are also burned out after dealing with Covid, widespread resignations, return-to-office policies, inflationary pressures and other strains, she said. Pay transparency is one more minefield.
“The whole point of a compensation program is to reward people,” Romanyshyn said. “You want to bring people in, and you want to retain the employees that you have. So the last thing I want to do is create questions. I do think it’s one big experiment.”
Companies typically set a range by deciding on a multiple they will use to get from the minimum to the maximum amount from the salary they are willing and able to pay, said Denise Liebetrau, a compensation consultant and pay negotiating coach at Prosper Consulting LLC. The sweet spot is to pay someone within 10% of the median of that pay range. If an employee is offered a salary outside of that range, either below or above, there should be a clear reason, said Liebetrau said.
For employees wondering how to interpret the new information, a good rule of thumb is to take the posted range, find the middle, and then compare that figure to salaries posted on third-party sites such as Glassdoor, according to Liebetrau. That rough analysis should reveal whether the range represents a reasonable salary. If it does, then the candidate needs to focus on building a case to be paid closer to the top of the range when they enter pay negotiations.
At the end of the day, the goal is for greater transparency in job postings to enable women and other under-paid workers to have a better idea of what a position might pay and what to ask for in negotiations, with the hope of narrowing pay gaps. At the national level, the pay gap for women is about 83 cents for every dollar their male counterparts earn, according to US Census figures. That gap varies by industry but tends to favor White men.