8 ms·

Rising pay transparency causing an employer compensation information 'arms race'

94 points by rustoo 3y ago

ghaff 3y ago
So there's an information arms race. But the story seems to suggest that the net effect isn't especially pronounced. For the candidate, more information is good I guess if it keeps you from wasting your time. On the other hand, the story also seems to suggest that it's maybe leading to more "take it or leave it" offers. (Though probably hard to factor out from overall hiring levels.)
monero-xmr 3y ago
Need to pay someone more in order to hire them? New job title - "Staff Software Engineer, Algorithm Design". Wow I just created a new pay band that's no longer bound by whatever was set for "Staff Software Engineer".
- rc_mob 3y ago
  Is this why companies have such weird job titles these day?
  - tyingq 3y ago
    That incentive was already there for things like H1B. Or unrelated reasons, like hiring/retention.
  - ghaff 3y ago
    Be aware that the titles people actually use day to day may not match their official HR titles. Not that I really use business cards any longer but I have basically never used the official title that's in the computer system. (Obviously, you shouldn't just make yourself a VP or whatever but I've always had a lot of latitude to change the title I use within reason.)
karaterobot 3y ago
I applaud pay transparency, but reading the text of my state's legislation regarding it (RCW 49.58.110), all I see is that it says most employers must have a pay scale that is known to candidates. My initial adversarial response as an imaginary business would be to say "okay, the pay scale for this position is between $0-$10000000, depending on qualifications". Now we're back where we started, with the candidate having no valuable information, and the company seemingly in compliance with the law. Why wouldn't this work? Anyway, with regards to the actual article, I was wondering just what mechanism supposedly made jobs with pay transparency harder to negotiate from a recruiter's perspective. Is the implication that there were no hard salary bands before this, so recruiters could sometimes offer 2x or 10x the salary? I'm sure it happened for exceptional candidates, even though it certainly never came up when I negotiated my salary... But I'm wondering: did it happen so often that it affects the overall statistics? That would be a moderate surprise to me.
- rafaelmn 3y ago
  Because stating your pay range like that makes you sound like a scammer ?
  - karaterobot 3y ago
    That's an absurd example, but you see what I mean. Change it to $150-275k if that makes more sense. That's still a huge range: it probably fits 75% of software jobs in the U.S. The point is that you could still comply with the letter of the law without giving candidates very much actual information.
    - ceejayoz 3y ago
      It does at least save you from the "senior devops engineer with 15 years experience" roles that get you all the way through the interview before dropping "and the salary is $50k".
    - ghaff 3y ago
      Which actually seems pretty reasonable assuming a median somewhere around the middle. That's +/- ~$60K which is a fair bit of money but seems like rational range for a given role.
johnny99k 3y ago
Pay transparency only helps the employer in the long-run. It essentially allows every employer to collude on how much they will pay a candidate. It also allows the employer to take most of your negotiating power away. It might work right now because not every company is transparent, but if these laws were in place everywhere, it will be a different story. "Pay transparency in some ways moves the competition away from salaries, away from wages and toward non cash benefits, or toward equity comp, toward flexibility," This puts more of the risk on the employee with very little control over how the company is run. Equity often forces you to stay at a poorly-run company or with a terrible manager because you won't be able to cash-out for at least a couple of years (if at all). I would much rather have the money up front and invest as I please.
- programmarchy 3y ago
  I doubt this take. How is every employer going to collude?
  - johnny99k 3y ago
    It will be public information, hence 'transparency'.
    - Kirby64 3y ago
      Employers already can pay for this data through companies that literally provide this. Employees do not have access to the same data due to cost (unless you count stuff like levels.fyi or Glassdoor). How would making this info more public help employers more than employees?
      - altdataseller 3y ago
        Glassdoor doesn’t count. It’s all self reported and full of biases. Taking a look at the median salaries for a few positions in SF and it’s grossly too low. Plus a lot of people might have the same job title as you but it doesn’t mean they do the exact same job as you
chrismorgan 3y ago
I looked at some job listings in last week’s whoishiring thread out of curiosity. Saw one company listing a salary range of $1K–1M on one job and $10–100K on another.
- phendrenad2 3y ago
  This kind of malicious compliance is what everyone said would happen, but to be fair most companies with any sense are too risk-averse to give that wide a range, and they actually give you a realistic idea of what the role will pay, with the low end being their lowest CoL location and the high end being SF/NYC/etc. YMMV of course...
  - ghaff 3y ago
    If you really won't negotiate up past some point, who wins by listing a higher number? And if you do encounter some superstar you really want to hire, there's usually the option of creating a position for them.
    - vidarh 3y ago
      Wouldn't argue it's a "superstar" position, but this is exactly what happened for me. I applied to a role where the range was too low but I figured I could negotiate it up, they told me they couldn't for that role, but that they had something else in mind that would work. This is also a plus of people listing ranges: You know when you can have a realistic shot of overshooting it. Asking for 20% above the top if your experience is valuable is not unreasonable. I've gone over the top of the top listed range several times over my career. (A bonus of trying for that, incidentally, is that you often stand out relative to other candidates and talking up salary and convincing people it's worth upping the seniority with you as only one of few candidates that experienced can work out well - aiming for a "I didn't realize we could get someone this experienced for only a little bit more" effect...)
      - ghaff 3y ago
        My current role, they just ended up creating a position for me. (I had sort of a non-standard background and they wanted to hire me.) It wasn't that the comp was especially spectacular but it was a lot better than what I was making and I wouldn't have fit neatly into posted jobs at the time.
alwaysrunning 3y ago
The problem with the added benefits is that you don't get their true value until after you have started working. To say that the employer covers your cost for health care might sound great until you see the level of HC they offer, or we cover PPO but not HSA. We offer 401K but no matching, or 1% matching, or ...you get the idea. So these perks can be misleading and you may turn down a higher base thinking you are getting a better overall package when in fact the opposite is true.
- jghn 3y ago
  100% of job offers I've had over the last few decades have come with access to information like "we cover PPO but not HSA" and "but no matching, or 1% matching".
  - cableshaft 3y ago
    I would never even consider a job offer until I received information on benefits, so I knew pretty much all of this ahead of my job acceptance. I don't think I've ever had an employer push back on sending this once they got to the point of putting in an offer.
- ghaff 3y ago
  Typically information about things like matching are available up-front and pretty easy to value. Medical, including things like disability is the major benefit that's hard to value. Even if you get all the information, it's hard to know how good or bad a given plan is and the value of various options for your specific situation. How do you even value disability plans. (There are market actuarial rates I guess but still doesn't say what the plan is worth to you personally.)
- vidarh 3y ago
  Not in the US, so the specifics are different, but 1) my offers have always included the details important to me either from the start or after I've pointed out what I want confirmed, 2) what really matters is the contract, and my assumption is that anything not in the contract doesn't exist. It's fine if they don't want to put something in the contract or the offer, but if so I tell them straight up that I will pretend it doesn't exist when evaluating how their offer stacks up. I do that because I agree perks can often be misleading, and the solution is to make clear you'll err on the side of caution. If their perks are actually really good, odds are they're prepared to promise them in writing.
danvoell 3y ago
Maybe there should be a realpage for employees.
zuhayeer 3y ago
Most companies still don’t necessarily list total compensation. For base salary though, these ranges are quite helpful and has definitely caused some “good” trouble increasing baseline wages among competing companies. At higher levels it’s still ambiguous what ranges truly are since job postings can span multiple job levels (which is why some ranges can feel dubiously wide). Ended up writing a bit about this phenomenon here and what contributes to it: https://www.levels.fyi/blog/notes-on-california-transparency-law.html https://www.levels.fyi/blog/notes-on-california-transparency...
chiefalchemist 3y ago
> “I think many of them are kind of patient and prepared to hold out for those candidates prepared to sort of suck it up and accept what they’re giving,” she added. Certainly. A person gets released without much warning and needs income. Quickly. They'll suck it up *temporarily*. But how long will they stay? How long before they look for the situation they actually want? Probably not long. And now the employer (and team) is back looking for talent. Moral of the story: Companies that favor bottom-fishing to save in the immediate are likely risking more over the probably not so long term.
bozhark 3y ago
It’s on the employees to hold their employers accountable. Absurd people ever thought not to compare pay
- lightbritefight 3y ago
  These laws make that easier to do. Not hard to pull up the job listing at your company and make sure youre making what's offered.
- johnnyanmac 3y ago
  >Absurd people ever thought not to compare pay It's unfortunately because the employee risks being retaliated upon (be it management or peers) instead of peers focusing down on management for better pay. It's also just general financial practice to never flaunt your cash around, so that spreads to the workplace. I'm more than happy to confide in anyone who asks privately, or to anonymously say my salary online. But I don't have much to gain sharing it with immediate co-workers. The way modern tech companies are (outside of entry level) makes it less reliable anyway. My immediate coworkers in my last two jobs were at least 5 years more experienced than me; I gain less from asking them and they never asked me.
jxramos 3y ago
What I heard recently is that a given job req is posted with two or three levels associated with it to have flexibility to secure a candidate. How the levels and bands break down for the specific role are obscured however. There are target percentiles to onboard someone into one of those bands though, 50-70th percentile allegedly.
- theGnuMe 3y ago
  I don’t think this will fly legally in the end even though it is a very common practice. It seems like there would likely be an LCA violation since there is a prevailing wage for a specific role if the company utilizes foreign labor (for example h1b) … but one is federal and wage transparency laws are state based so dunno how it’ll play out. The states themselves might be irked by the loophole as well. I think, if a major employer who also hires h1bs does this it would be worth challenging in court. I guess the state att general would bring it vs an individual but maybe a person who is down leveled could as well.
  - jxramos 3y ago
    Here’s a job posting with an interesting clarification applied with respect to the band > The Redwood City, CA base pay range for this role is $190,000 - $285,000. New hires are typically hired into the lower portion of the range, enabling employee growth in the range over time. Actual placement in range is based on job-related skills and experience, as evaluated throughout the interview process. Pay ranges outside Redwood City are adjusted based on cost of labor in each respective geographical market. Your recruiter can share more about the specific pay range for your location during the hiring process.
siliconc0w 3y ago
The problem is that this captures just salary compensation, it doesn't include bonuses or equity which is a huge factor for many jobs(and soon I imagine more due to this law).
- altdataseller 3y ago
  The vast majority of jobs do not have equity, even in tech. Also bonuses are discretionary and aren’t guaranteed, so there’s no easy way for employers to mention an amount they can stick with in the job posting.
syngrog66 3y ago
good pay transparency: quoting pay in public listing less good: showing a range poor transparency: big range worse: none at all. instead just doing one-off probing via per-candidate quotes, on phone, tho non-commital worst: asking each candidate what they want. thats a financial privacy violation, esp since almost always the asker is a stranger whose true motivations are unknown
- fred_is_fred 3y ago
  "a financial privacy violation"? Asking the candidate how much they want to make, as annoying as it is, is not the same as asking to see their credit card statements and bank records.
  - syngrog66 3y ago
    strawman and its asking for a fact about their current financial situation. instead an employer should only either publish a public number. or make a concrete offer in good faith this is esp important as the gov/corp/criminal surveillance state seems to be accelerating out of control in the last few years
mike503 3y ago
It's great to have transparency. It's bogus that they're able to get away with junk like $1000-1,000,000; that should be a violation of the transparency. Heaven forbid companies have to compete for talent!
Ancalagon 3y ago
slightly off topic: but I pretty much wont even apply to jobs not listing salaries anymore. Especially ones in CA/NY where the company has > 250 employees, but even then having a pay range is a great way to filter out some of these lower paying companies that seem obsessed with wasting my time.
AnetteJourdan 3y ago
[dead]

94 points by rustoo 3y ago

So there's an information arms race. But the story seems to suggest that the net effect isn't especially pronounced. For the candidate, more information is good I guess if it keeps you from wasting your time. On the other hand, the story also seems to suggest that it's maybe leading to more "take it or leave it" offers. (Though probably hard to factor out from overall hiring levels.)

monero-xmr 3y ago

Need to pay someone more in order to hire them? New job title - "Staff Software Engineer, Algorithm Design". Wow I just created a new pay band that's no longer bound by whatever was set for "Staff Software Engineer".

rc_mob 3y ago
Is this why companies have such weird job titles these day?
- tyingq 3y ago
  That incentive was already there for things like H1B. Or unrelated reasons, like hiring/retention.
- ghaff 3y ago
  Be aware that the titles people actually use day to day may not match their official HR titles. Not that I really use business cards any longer but I have basically never used the official title that's in the computer system. (Obviously, you shouldn't just make yourself a VP or whatever but I've always had a lot of latitude to change the title I use within reason.)

karaterobot 3y ago

I applaud pay transparency, but reading the text of my state's legislation regarding it (RCW 49.58.110), all I see is that it says most employers must have a pay scale that is known to candidates. My initial adversarial response as an imaginary business would be to say "okay, the pay scale for this position is between $0-$10000000, depending on qualifications". Now we're back where we started, with the candidate having no valuable information, and the company seemingly in compliance with the law. Why wouldn't this work? Anyway, with regards to the actual article, I was wondering just what mechanism supposedly made jobs with pay transparency harder to negotiate from a recruiter's perspective. Is the implication that there were no hard salary bands before this, so recruiters could sometimes offer 2x or 10x the salary? I'm sure it happened for exceptional candidates, even though it certainly never came up when I negotiated my salary... But I'm wondering: did it happen so often that it affects the overall statistics? That would be a moderate surprise to me.

rafaelmn 3y ago
Because stating your pay range like that makes you sound like a scammer ?
- karaterobot 3y ago
  That's an absurd example, but you see what I mean. Change it to $150-275k if that makes more sense. That's still a huge range: it probably fits 75% of software jobs in the U.S. The point is that you could still comply with the letter of the law without giving candidates very much actual information.
  - ceejayoz 3y ago
    It does at least save you from the "senior devops engineer with 15 years experience" roles that get you all the way through the interview before dropping "and the salary is $50k".
  - ghaff 3y ago
    Which actually seems pretty reasonable assuming a median somewhere around the middle. That's +/- ~$60K which is a fair bit of money but seems like rational range for a given role.

johnny99k 3y ago

Pay transparency only helps the employer in the long-run. It essentially allows every employer to collude on how much they will pay a candidate. It also allows the employer to take most of your negotiating power away. It might work right now because not every company is transparent, but if these laws were in place everywhere, it will be a different story. "Pay transparency in some ways moves the competition away from salaries, away from wages and toward non cash benefits, or toward equity comp, toward flexibility," This puts more of the risk on the employee with very little control over how the company is run. Equity often forces you to stay at a poorly-run company or with a terrible manager because you won't be able to cash-out for at least a couple of years (if at all). I would much rather have the money up front and invest as I please.

programmarchy 3y ago
I doubt this take. How is every employer going to collude?
- johnny99k 3y ago
  It will be public information, hence 'transparency'.
  - Kirby64 3y ago
    Employers already can pay for this data through companies that literally provide this. Employees do not have access to the same data due to cost (unless you count stuff like levels.fyi or Glassdoor). How would making this info more public help employers more than employees?
    - altdataseller 3y ago
      Glassdoor doesn’t count. It’s all self reported and full of biases. Taking a look at the median salaries for a few positions in SF and it’s grossly too low. Plus a lot of people might have the same job title as you but it doesn’t mean they do the exact same job as you

chrismorgan 3y ago

I looked at some job listings in last week’s whoishiring thread out of curiosity. Saw one company listing a salary range of $1K–1M on one job and $10–100K on another.

phendrenad2 3y ago
This kind of malicious compliance is what everyone said would happen, but to be fair most companies with any sense are too risk-averse to give that wide a range, and they actually give you a realistic idea of what the role will pay, with the low end being their lowest CoL location and the high end being SF/NYC/etc. YMMV of course...
- ghaff 3y ago
  If you really won't negotiate up past some point, who wins by listing a higher number? And if you do encounter some superstar you really want to hire, there's usually the option of creating a position for them.
  - vidarh 3y ago
    Wouldn't argue it's a "superstar" position, but this is exactly what happened for me. I applied to a role where the range was too low but I figured I could negotiate it up, they told me they couldn't for that role, but that they had something else in mind that would work. This is also a plus of people listing ranges: You know when you can have a realistic shot of overshooting it. Asking for 20% above the top if your experience is valuable is not unreasonable. I've gone over the top of the top listed range several times over my career. (A bonus of trying for that, incidentally, is that you often stand out relative to other candidates and talking up salary and convincing people it's worth upping the seniority with you as only one of few candidates that experienced can work out well - aiming for a "I didn't realize we could get someone this experienced for only a little bit more" effect...)
    - ghaff 3y ago
      My current role, they just ended up creating a position for me. (I had sort of a non-standard background and they wanted to hire me.) It wasn't that the comp was especially spectacular but it was a lot better than what I was making and I wouldn't have fit neatly into posted jobs at the time.

alwaysrunning 3y ago

The problem with the added benefits is that you don't get their true value until after you have started working. To say that the employer covers your cost for health care might sound great until you see the level of HC they offer, or we cover PPO but not HSA. We offer 401K but no matching, or 1% matching, or ...you get the idea. So these perks can be misleading and you may turn down a higher base thinking you are getting a better overall package when in fact the opposite is true.

jghn 3y ago
100% of job offers I've had over the last few decades have come with access to information like "we cover PPO but not HSA" and "but no matching, or 1% matching".
- cableshaft 3y ago
  I would never even consider a job offer until I received information on benefits, so I knew pretty much all of this ahead of my job acceptance. I don't think I've ever had an employer push back on sending this once they got to the point of putting in an offer.
ghaff 3y ago
Typically information about things like matching are available up-front and pretty easy to value. Medical, including things like disability is the major benefit that's hard to value. Even if you get all the information, it's hard to know how good or bad a given plan is and the value of various options for your specific situation. How do you even value disability plans. (There are market actuarial rates I guess but still doesn't say what the plan is worth to you personally.)
vidarh 3y ago
Not in the US, so the specifics are different, but 1) my offers have always included the details important to me either from the start or after I've pointed out what I want confirmed, 2) what really matters is the contract, and my assumption is that anything not in the contract doesn't exist. It's fine if they don't want to put something in the contract or the offer, but if so I tell them straight up that I will pretend it doesn't exist when evaluating how their offer stacks up. I do that because I agree perks can often be misleading, and the solution is to make clear you'll err on the side of caution. If their perks are actually really good, odds are they're prepared to promise them in writing.

danvoell 3y ago

Maybe there should be a realpage for employees.

zuhayeer 3y ago

Most companies still don’t necessarily list total compensation. For base salary though, these ranges are quite helpful and has definitely caused some “good” trouble increasing baseline wages among competing companies. At higher levels it’s still ambiguous what ranges truly are since job postings can span multiple job levels (which is why some ranges can feel dubiously wide). Ended up writing a bit about this phenomenon here and what contributes to it: https://www.levels.fyi/blog/notes-on-california-transparency-law.html https://www.levels.fyi/blog/notes-on-california-transparency...

chiefalchemist 3y ago

> “I think many of them are kind of patient and prepared to hold out for those candidates prepared to sort of suck it up and accept what they’re giving,” she added. Certainly. A person gets released without much warning and needs income. Quickly. They'll suck it up *temporarily*. But how long will they stay? How long before they look for the situation they actually want? Probably not long. And now the employer (and team) is back looking for talent. Moral of the story: Companies that favor bottom-fishing to save in the immediate are likely risking more over the probably not so long term.

bozhark 3y ago

It’s on the employees to hold their employers accountable. Absurd people ever thought not to compare pay

lightbritefight 3y ago
These laws make that easier to do. Not hard to pull up the job listing at your company and make sure youre making what's offered.
johnnyanmac 3y ago
>Absurd people ever thought not to compare pay It's unfortunately because the employee risks being retaliated upon (be it management or peers) instead of peers focusing down on management for better pay. It's also just general financial practice to never flaunt your cash around, so that spreads to the workplace. I'm more than happy to confide in anyone who asks privately, or to anonymously say my salary online. But I don't have much to gain sharing it with immediate co-workers. The way modern tech companies are (outside of entry level) makes it less reliable anyway. My immediate coworkers in my last two jobs were at least 5 years more experienced than me; I gain less from asking them and they never asked me.

jxramos 3y ago

What I heard recently is that a given job req is posted with two or three levels associated with it to have flexibility to secure a candidate. How the levels and bands break down for the specific role are obscured however. There are target percentiles to onboard someone into one of those bands though, 50-70th percentile allegedly.

theGnuMe 3y ago
I don’t think this will fly legally in the end even though it is a very common practice. It seems like there would likely be an LCA violation since there is a prevailing wage for a specific role if the company utilizes foreign labor (for example h1b) … but one is federal and wage transparency laws are state based so dunno how it’ll play out. The states themselves might be irked by the loophole as well. I think, if a major employer who also hires h1bs does this it would be worth challenging in court. I guess the state att general would bring it vs an individual but maybe a person who is down leveled could as well.
- jxramos 3y ago
  Here’s a job posting with an interesting clarification applied with respect to the band > The Redwood City, CA base pay range for this role is $190,000 - $285,000. New hires are typically hired into the lower portion of the range, enabling employee growth in the range over time. Actual placement in range is based on job-related skills and experience, as evaluated throughout the interview process. Pay ranges outside Redwood City are adjusted based on cost of labor in each respective geographical market. Your recruiter can share more about the specific pay range for your location during the hiring process.

siliconc0w 3y ago

The problem is that this captures just salary compensation, it doesn't include bonuses or equity which is a huge factor for many jobs(and soon I imagine more due to this law).

altdataseller 3y ago
The vast majority of jobs do not have equity, even in tech. Also bonuses are discretionary and aren’t guaranteed, so there’s no easy way for employers to mention an amount they can stick with in the job posting.

syngrog66 3y ago

good pay transparency: quoting pay in public listing less good: showing a range poor transparency: big range worse: none at all. instead just doing one-off probing via per-candidate quotes, on phone, tho non-commital worst: asking each candidate what they want. thats a financial privacy violation, esp since almost always the asker is a stranger whose true motivations are unknown

fred_is_fred 3y ago
"a financial privacy violation"? Asking the candidate how much they want to make, as annoying as it is, is not the same as asking to see their credit card statements and bank records.
- syngrog66 3y ago
  strawman and its asking for a fact about their current financial situation. instead an employer should only either publish a public number. or make a concrete offer in good faith this is esp important as the gov/corp/criminal surveillance state seems to be accelerating out of control in the last few years

mike503 3y ago

It's great to have transparency. It's bogus that they're able to get away with junk like $1000-1,000,000; that should be a violation of the transparency. Heaven forbid companies have to compete for talent!

Ancalagon 3y ago

slightly off topic: but I pretty much wont even apply to jobs not listing salaries anymore. Especially ones in CA/NY where the company has > 250 employees, but even then having a pay range is a great way to filter out some of these lower paying companies that seem obsessed with wasting my time.

AnetteJourdan 3y ago

[dead]