Salary Transparency’s Effect on The Pay Gap and Possible Side Effects

New research suggests that while salary transparency helps to close the wage gap, it has some negative side effects.

Recently, economists from the University of Toronto, Princeton University, and the Social Analysis and Modelling Division from Statistic Canada examined the impact of salary disclosure on higher education faculty salaries.  Interestingly, while the research shows that salary transparency helps to close the wage gap, it has some negative side effects.  Here’s what you need to know about the study’s findings.

Using data from Canadian faculty, the researchers drew three main conclusions regarding salary disclosure laws.  First, salary transparency reduced the gender pay gap.  Secondly, the gender wage gap closed primarily at universities where faculty are unionized. Thirdly, salary transparency ultimately reduced all salaries on average.

To clarify, while salary transparency helped to close the gender wage gap in the short term, this benefit was not long-lasting.  Over time, salary disclosure led employers to lower overall salaries rather than raise women’s salaries to meet the level of their male co-workers.

The researchers noted that it’s possible that salary transparency laws did not actually have an effect on the gender wage gap.  While learning about co-workers’ salaries might reveal something about individual workplaces, if both men and women used this information during wage negotiations, there probably wouldn’t be much impact on the gender wage gap.  If men, but not women, used the information, then the gap could be exacerbated.

Here’s what you need to know about the study that suggested that while salary transparency helps to close the wage gap, it has some negative side effects.  Looking for a consulting firm with experience working with salary, legal, and other human resources considerations?  Then don’t hesitate to contact the professionals at McKnight Associates, Inc.  We are ready to offer you hands-on human resources consulting for colleges, universities, medical centers, and organizations of all sizes.