According to The Conference Board, in the first half of 2021, wages and salaries rose at their fastest pace in more than 20 years. There are a number of things at play — not least the tight labor market, which is leaving some employers scrambling to hire good candidates.
Meanwhile, that trend is colliding with another big change in the workplace: the growing movement toward salary transparency.
“The hiring market is pretty crazy,” said Michael Kerrigan, director of human resources for Interactive Brokers, a financial services firm in Greenwich, Connecticut.
He said he’s been involved in more than 750 new hires this year.
“The salary negotiation seems to be coming much sooner in the process,” he said. “If you don’t interview, hire, make a decision on someone relatively quickly, they’ll be gone.”
For Kerrigan, the task of negotiating salary just changed significantly. This year, Connecticut passed a new kind of law aimed at pay equity. It’s one of seven states so far to adopt similar legislation. Employers must tell job candidates upfront — if they ask — the range of pay for the position. That’s aimed at evening the playing field, especially for women and people of color.
But Kerrigan said it’s left him scrambling to keep up.
“If someone comes in and we really want them, we’ll give them the pay that they want, and now we just change our range again,” he said. “Now we have to go back out to that job and say the range is different.”
His firm is now reviewing its entire compensation structure every month, and that includes offering raises to existing staff so that they stay in step with new hires.
David Lewis is seeing the same thing at many companies already stretched to the limit by the myriad challenges posed by the pandemic.
“This is the biggest revolution that I’ve lived through in my lifetime, and probably will,” he said.
Lewis’ firm, OperationsInc, is also based in Connecticut but handles HR services for more than 1,000 companies across the country. The idea of setting pay ranges for every job is new territory for many of those firms.
“Most companies can safely say that employee A doesn’t know what employee B is making — these laws change that,” he said.
A change that aims to give job seekers an advantage. Biota Macdonald lives in Connecticut, but she just got a remote job in Chicago, so she didn’t benefit from the new law. She said knowing the hiring company’s pay range would have reassured her that she wasn’t underselling herself during a stressful salary negotiation.
“For me, as a woman of color, it was difficult to bring myself to negotiate. But then being able to get the range upfront, I can see something like that making a huge difference,” she said.
The competitive market did give her a boost. She said her salary and signing bonus offer put her at 70% more than the job she left. But of course, she doesn’t know how that compares with her new colleagues.