Experts from the UB School of Management available to weigh in on new pay transparency laws

By Jacqueline Molik Ghosen

BUFFALO, N.Y. — New York is poised to join California, Colorado, Washington state and New York City in ratifying new laws on pay transparency. Policymakers say the measures are designed to combat pay disparities, which often disproportionately affect women and workers of color.

Jerry M. Newman, PhD
SUNY Distinguished Teaching Professor Emeritus
University at Buffalo School of Management

Newman is a nationally recognized expert on setting wages and co-author of Compensation, the leading book on that topic for more than 30 years.

According to Newman, in the 1960s women made 60% of mens’ wages. You would think in the ensuing years that gap would have closed to zero. In reality though only half that gap has been eliminated. Why? Because if you look closely at wage issues, employers have few incentives to make a system transparent.

“If they are discriminating in wages against women, whether intentionally or not, an open system would telegraph that discrimination, says Newman. “An open system would also telegraph other inequities.”

On the flip side, studies show that employees paid less than their peers, even if they have lower performance or less job tenure, will perceive the difference as unfair.

“A law that makes a wage system transparent would open a Pandora’s box,” Newman says.

Kate Bezrukova, PhD
Associate Professor and Chair of Organization and Human Resources
University at Buffalo School of Management

Bezrukova is an expert on team chemistry and performance. Her research has examined the effectiveness of diversity training, how fault lines impact group and organizational performance, and how to build and manage strong teams.

“The first question most people ask when deciding whether to apply for a job is, ‘How much does it pay?’” says Bezrukova. “The problem is, companies often don’t offer that central piece of information. Instead, fuzzy language about ‘competitive salary’ is offered.”

She adds that while there may be multiple reasons for not disclosing pay, much of it is about keeping the upper hand in negotiating terms of the job.

Bezrukova says lack of transparency has also made disparities in pay on the basis of gender, race and other factors harder to identify. The recent legislation in several states requiring businesses to disclose compensation is a reaction to these issues and suggests a trend for (at least some) state governments to take steps to increase pay transparency.

According to Bezrukova, while arguments can be made to maintain secrecy in pay, including a business’s right to keep pay a secret, several points can be made supporting pay transparency.

“Moving towards a more transparent pay system can signal that a business actually values and prioritizes pay fairness and attracting and keeping a productive workforce,” says Bezrukova.