Lack of transparency in salary could be driving income disparity
EXCLUSIVE: Experts at the consulting firm McKinsey & Company offer perspectives on how businesses can address these challenges.
New York City will require employers with more than four employees to provide salary ranges on job postings as early as April. So far, the advancement in salary transparency is highlighting a strongly desired public discourse on income disparity.
Rosie Nguyen, founder of Fanhouse, sparked a thought-provoking conversation on what many affluent people at one of the nation’s top universities believe is the reason for income inequality in the United States — “poor people are unable to make good decisions in our society.”
An example of the poor decisions that presumably give way to pay inequalities can be accepting lowball offers during salary negotiations.
In the tech industry some new hires have left money on the table because they did not have access to people who have worked in the field who could explain what a standard sign-on package should include.
Sherrell Dorsey, author of Upper Hand: The Future of Work for the Rest of Us, told theGrio about her experience in this situation.
“I do tell my own story of leaving tens of thousands of dollars on the table in some of my prior jobs, just not knowing and understanding signing bonuses or stock options, particularly as it relates to tech,” Dorsey admitted. “A lot of communities don’t necessarily have that insight…compensation isn’t just your salary.”
People often reference the gender pay gap as one of the main contributors to socioeconomic inequality in the United States. But to really get at the heart of the matter, experts conceptualize additional factors that lend to salary limitations — race, age, educational background and years of experience.
According to a report on the Black experience in the private sector from McKinsey & Company, a consulting firm that advises many of the world’s most influential businesses and institutions, Black employees were 41% less likely to view promotions as fair.
Experts at the consulting firm offered perspectives on how businesses can address these challenges.
“Being very clear wherever you can of specific skills that are required [can] make it much easier to be objective in these measures and to have other people [lean] into the hiring process or promotion process and [be] able to say these candidates are appropriately slotted where they should be, and leaves less space for discretion,” explained Monne Williams, a partner at McKinsey and member of the leadership team for McKinsey Academy.
While many experts are hopeful that requiring companies to disclose salary ranges on job descriptions can help combat discriminatory salary offers, they still see a small window of opportunity for it to arise. Salary ranges opposed to setting a specific salary can still leave the door open to disadvantage lower income or inexperienced candidates.
Ali Bustamante, deputy director of education, jobs & worker power at the Roosevelt Institute explained to theGrio that in many cases basing a salary on years of experience can limit early career Black and Brown job seekers whose communities disproportionately lack access to resources.
“When we know that, you know, that we’ve historically as a country limited the potential experiences, work experiences and opportunities for women and people of color,” said Bustamente, “Then it already kind of begs the question, why are we, you know, basing compensation on past experiences, right?”
Cyntoni Miller, CEO of Black on the Job specializes in confronting incoming disparities through developing personalized salary negotiations tactics for her clients. She has grossed upwards of $40 million in salary increases for Black people across a host of industries.
“When we’re looking at how do we show up to these interviews to ensure that they’re not looking at my Blackness, and determining my value off my Blackness to their benefit, we first have to say, what is my value?,” Miller told theGrio.
Miller underscored that setting a salary that matches years of experience rather than establishing the salary with the job functions in mind can present some residual feelings of resentment over time. To avoid this frustration, Miller recommends candidates “interview with your resume” and “negotiate with your lifestyle.”
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