the KOAN method

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089 – Stacy Vanek Smith.The Big Reveal

Smith, Stacy Vanek. (2022). “The Big Reveal: New Laws Require Companies
to Disclose Pay Ranges on Job Postings.” National Public Radio. November 5, 2022.

Trey Ditto remembers the moment when the salary ranges for his company’s positions were revealed. Ditto runs the New York-based firm Ditto PR, which has a few dozen employees, and he published salary ranges on his website. He said the second the information went live, it felt like riding a roller coaster. “You know it’s gonna be a little bumpy, but you know it’s gonna be alright.”

New York City has joined a handful of places, including Colorado, Washington State and Rhode Island, which require some form of salary transparency. In the case of New York City, companies are required to include a salary range when they post a job opening.

Ditto PR was ahead of the curve – Ditto posted company salaries about six months ago. Most New York City companies were not ready for the roller coaster of salary transparency. Although the laws were set to go into effect in the spring, New York companies pushed for more time. The law was pushed back until Nov. 1.

Ditto understands why. He said it was a mix of fear and excitement for him as the salary information became public. “My biggest concern was the small handful of employees that would have questions and say, ‘What about me?'”

What about me?

For anyone who has ever discovered they were grossly overpaid or underpaid compared to a colleague, it’s understandable why employers would be nervous for information about pay to be available and why employees would have questions. Few topics are as emotionally charged as salary. It is, after all, the most concrete expression of how much our workplace and company values us and our work. And things can get messy.

Especially messy since salary and pay have, statistically speaking, major inequities in them. The much-studied gender pay gap is going strong, with women making just over 80 cents on the dollar compared to men, Black women earning roughly 65 cents and Latina and Indigenous American women making roughly 55 cents compared to men. Those numbers have barely budged in the last decade. LGBTQ workers and other marginalized workers get paid less as well, with trans people earning roughly a third less than their cisgender counterparts.

“We were just guessing”

Ditto and his team spent more than a year preparing for the salary reveal. Ditto said it was necessary to have that time look across all of his workers’ pay and make adjustments.

Even though Ditto had overseen workers’ salaries and always valued diversity and equal pay, he was surprised to find inequities in compensation at his company. He said a lot of the reason was that he had never put a formal system in place. Pay had always been decided on an individual basis: Typically he would find a worker he wanted to hire and figure out how much money they wanted to be paid and make a deal. Similarly, raises would usually be given out when and if a person asked.

“We were just guessing,” he said. “And there is no way that bias didn’t seep in, right?” When Ditto actually looked at the data, it was striking. “The people that had the lowest salaries were women. And loud, white men shouldn’t get paid more than a soft-spoken woman, but that’s what was happening.”

A tricky conversation

Ditto said when he made the decision that salaries were going to be made public, he realized he would have to justify those salaries to his staff and create a system of concrete rules that would apply to everyone. He knew he would end up having a lot of conversations explaining those rules.

“Money’s always a, a tricky conversation,” Ditto said. “Someone’s going to see that salary range and say, ‘I’m at the low end of this range.'” Ditto said another conversation was with workers who wanted to be paid above the official range.

“They would say, ‘I want more money!’ And my response would be, ‘You just can’t get that much money, because then that would make the playing field un-level.'” Ditto said he lost workers because of some of these conversations.

Ditto said one of the most difficult parts of salary transparency was also one of the most rewarding: There were honest conversations about how people could improve and get where they wanted to go – conversations that are easy to avoid if you don’t have to have them. “I imagine those conversations are happening all across New York,” he said.

The good, the bad and the equitable

Ditto said the switch to pay transparency has been difficult, time consuming and expensive, but there have been real advantages, too. Ditto said workers have become more productive, and retention has gone up.

“The more information the employee has, the more likely they are to work even harder and be more productive,” he said. “Because if I can see the top of the mountain, then I know that I can get there.”

Ditto said he has not disclosed his own salary to his employees. “They know a range for me,” he said. “They know I get paid a lot less than some of the other workers.”

All clear

Some employers are going a step further with their transparency. Molly Moon Neitzel owns a chain of ice cream shops in Seattle, Washington. Molly Moon’s Homemade Ice Cream employs between 100 and 200 workers, depending on the season, and every person’s pay is made visible to the workers at the company.

Neitzel said salary transparency was always something she believed in strongly. She knew it would require a big effort and a lot of planning on the part of her small business, but she said it was worth it to her. “I realized that I wanted to make it a priority, because darkness and secrecy around compensation is racist and sexist, and it is what has held women and people of color down,” Neitzel said. “I see pay transparency as one of the easiest, most efficient things you can do to get women and people of color equal pay.”

88 coffee dates

Moon said in her opinion, pay equity isn’t possible without salary transparency. “It’s like accountability. I trust a team,” Neitzel said.

Before revealing everyone’s salaries, Neitzel sat down with everyone. “I had coffee with all of our employees that fall, which was 88 coffee dates in two weeks. I was very caffeinated.”

Neitzel said she took that time because some people were going to see their pay go down and she knew there would be questions. “We are messing with people’s pay and that’s really sensitive,” she said. Neitzel said she didn’t lose a single employee. For workers who saw their compensation fall, Neitzel made sure to have a path to promotion or another way to get their pay to the level they wanted.

Neitzel said the day she revealed the salary was not nerve-wracking at all. “At that point, it wasn’t a big deal,” Neitzel said. “I had just had 88 coffee dates and everybody knew what was going to happen. For our employees in the shops, I think the only surprises were how much money I made and how much money the leadership team made.”

How much does she make? “$408,602.43,” Neitzel said without missing a beat. I asked if it felt weird for her to tell me that. “No. Two-hundred people in my company know that and I have an agreement with my investor group that I make 5% of sales.” Like the compensation for her workers, Neitzel’s own pay has a clear and transparent system.

American history

Neitzel said she’s glad to see pay transparency laws happening in New York City and elsewhere, though she’s not surprised there has been pushback from business owners.

“No, I’m not surprised,” Neitzel said. “The people in power wanna stay in power. That’s not surprising. That’s American history.”

Possibly also not surprising are the myriad loopholes companies are already finding in the new laws. For one thing, the salary ranges companies post aren’t hard and fast; employers can stray outside of them. Also, other forms of compensation, such as bonuses and stock options, don’t have to be disclosed.

And the ranges themselves can be rather beefy. In one particularly striking example, Citi posted a job based in New York City with a salary range of between $0 and$2 million.Citi responded to questions saying the posting had been the result of a technical error. They later updated the salary range for the job posting to between $59,340 and $149,320.