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Pay transparency is now a norm for many US employers, according to recent surveys, thanks to a wave of legislation requiring businesses to share information about salaries in job postings.
But transparency can also reveal pay inequities within organizations, prompting questions for HR leaders. The surveys also indicate employers are starting to develop strategies to address pay equity, and in some cases are budgeting for raises to address compensation gaps within their workforces.
Most employers comply with pay transparency. Some three-quarters of organizations surveyed in June by advisory, broking, and solutions firm WTW said they’re sharing the pay rate or range for open jobs with external candidates, while 69% said they share this information with internal candidates. Among the US organizations already communicating this information, 86% said they’re sharing pay rates or ranges across the entire country or region.
The most common reason organizations gave for communicating more about pay were regulatory requirements, though company values and culture, as well as employee expectations, are driving transparency as well.
A separate survey from consulting firm Mercer found around 30% of organizations are considering sharing pay ranges beyond what the law already requires.
Increased pay transparency may raise “questions and comparisons between job postings for prospective employees and how they stack up with internal salaries,” Lindsay Wiggins, WTW’s North America Pay Equity co-leader, said in a statement. She added it “has the potential to surface many of the inequities that have resulted from a recent emphasis on hiring people higher in the range and salary compression for existing employees.”
The next frontier: pay equity. As employers comply with pay transparency, they’re also revamping their compensation programs, said Jack Jones, a principal with Mercer’s career practice, in a webinar discussing the firm’s 2025 compensation planning survey. “When you have to open up your processes and show people what you’re doing, it’s really important that you’re confident in what you’re actually doing,” he said.
Over half (52%) of organizations surveyed by Mercer said they were “proactively conducting pay equity studies to identify outliers,” while 53% reported making pay adjustments in light of factors including pay equity considerations.
Taking pay equity into consideration is critical, Jones said, as fixing outliers proactively can help employers avoid potential litigation or lawsuits. Developing a strategy around this can also improve their broader HR strategy. “Companies who are getting ahead of this pay transparency, they're actually establishing a distinct competitive advantage over some of their competitors,” he said, citing figures that found workers at such organizations are more committed and engaged.
While employers are prioritizing pay equity along with transparency, their budgeting strategies to this end vary, a recent survey from the Conference Board found. Just 10% of compensation leaders indicated their companies maintain separate budgets for pay equity, and instead said they would fund pay adjustments related to equity through other areas of their compensation budgets, such as funds allocated for merit or general budget.