Latest / Hiring & Firing with Fexingo: Recruitment, Performance, and Workforce Decisions / Why Salary Transparency Laws Are Reshaping Hiring
Transcript
- Lucas: Let's talk about salary transparency. Not the concept — everyone's heard the arguments by now. I mean the actual, on-the-ground effect it's having on how companies hire and how candidates negotiate. Luna: Because it's not just about posting a number in a job ad anymore. It's reshaping the whole power dynamic. Lucas: Exactly. Take Colorado. When they passed their law in 2021, a lot of national companies just blocked Colorado applicants from applying rather than posting salary ranges. That was the first reaction — avoidance. Luna: I remember that. Some companies literally geo-fenced their career portals. Lucas: Fast forward to May 2026, and we've got laws in New York, California, Washington, Rhode Island, and the EU Pay Transparency Directive that went into effect last year. Avoidance is no longer an option for most firms. So now they're actually having to figure out what their ranges are. Luna: And that's harder than it sounds. Because most companies — especially larger ones — have never had disciplined pay bands. Lucas: Right. A recent survey by a compensation data firm found that only about 40 percent of companies with over 1,000 employees had formal, written salary ranges before 2023. The rest relied on 'market rate' gut feels and negotiation history. So transparency laws are essentially forcing a compensation hygiene project. Luna: And what's interesting is how managers are reacting. I've heard from recruiters that some hiring managers are deliberately setting wide ranges — like 80 to 180 thousand — to keep flexibility. Lucas: That's a tell, right? A range that wide says 'we don't actually know what this role is worth.' Or worse, 'we want to pay the least we can get away with.' But there's evidence that narrowing the range actually improves applicant quality. Luna: There's a case I read about — a mid-size tech firm in Denver. They had a role posted at 110 to 170 thousand. After the Colorado law, they narrowed it to 130 to 150. They got 30 percent more applicants, and the ones who applied were better qualified. Lucas: Because the wide range signals uncertainty. High-quality candidates don't want to waste time on a company that can't decide what the job pays. They have options. But a tight, credible range says 'we've done the homework.' Luna: So transparency doesn't just help candidates — it helps companies that are serious about hiring efficiently. Lucas: It also changes negotiation. When a candidate knows the range upfront, the conversation shifts from 'how much can I get' to 'where in the band does my experience land.' That's a healthier conversation, but it requires managers to actually justify placements. Luna: And that's where the equity piece comes in. Historically, women and people of color have been less likely to negotiate, or they've been offered lower starting points. Transparency compresses that gap. Lucas: The data backs it up. A study from the University of Chicago looked at the Colorado law and found that women's salary offers increased by about 3 percent relative to men's in the first year. Not a giant leap, but statistically significant. And it's early. Luna: Three percent may not sound like much, but compound that over a career — it matters. Lucas: Absolutely. Now, the EU directive goes further. It requires companies with over 250 employees to report gender pay gaps and take action if the gap exceeds 5 percent. That's real teeth. Luna: I think that's going to push companies to be more deliberate about how they define roles. Because if you have a job title that covers three different levels of seniority, your pay gap reporting is going to look worse than it is. Lucas: Right. So you end up with more granular job architecture. Instead of 'Senior Analyst,' you get 'Senior Analyst I, II, III' with distinct ranges. That's good for hiring — candidates know exactly what they're getting into. Luna: But there's a downside. Some companies are using location-based pay to circumvent the spirit of transparency. They'll post a salary range for New York City, but then if you're remote in a lower-cost area, they offer the bottom of the band. Lucas: That's a real tension. And it's leading to some interesting policy debates. Should pay be based on the value of the work or the cost of the worker's zip code? Most transparency laws don't require location-agnostic pay, so companies have room to maneuver. Luna: What's your sense of where this is heading? Another five years from now, will every job ad have a salary range? Lucas: I think it's inevitable. Once you have a critical mass of states and countries requiring it, the cost of maintaining different policies for different jurisdictions exceeds the cost of just posting ranges everywhere. We're already seeing that with companies like Microsoft and Amazon — they post ranges for all U.S. roles now, even where not required. Luna: So it becomes a standard practice, like including the job title and location. Lucas: Exactly. And that's good for the labor market. Information asymmetry has always benefited employers in wage negotiations. Transparency reduces that asymmetry. It's not a silver bullet for the gender pay gap, but it's a necessary condition. Luna: Before we wrap, I want to come back to something you said earlier — about the quality of applicants improving. That's a benefit that doesn't get enough airtime. Lucas: Totally. And it's one of those things that, if you're a hiring manager, you can test yourself. Next time you post a role, try narrowing the range by 20 percent on each end and see what happens to your applicant pool. I'd bet you get fewer tire-kickers. Luna: And if you're a candidate, what's your takeaway? Lucas: Use the range. Don't just look at the midpoint. Know where you fall based on your experience, and be ready to make a case. The company has already told you what they're willing to pay — now it's about positioning yourself within that band. Luna: Smart. And if there's no range listed, ask for it early. If they dodge, that's a red flag. Lucas: Alright, that's our episode. If these conversations have moved your work forward in some small way, and you'd like to support the ad-free model, we keep it that way because of listeners like you. The link is buy me a coffee dot com slash fexingo. Luna: It really does make a difference. Thanks for being part of this. Lucas: So next time you're job searching or hiring, think about the range. It's more than a number — it's a signal. We'll be back next week with another angle on the workforce.