Although 43% of hiring managers believe disclosing salary information in job postings attracts more highly qualified candidates, only 35% of companies we surveyed actually include salary information in such postings.
Large companies were more likely to disclose pay rates for entry-level jobs compared to small companies, but were also less likely to post salaries for high-level jobs.
We found no indication that disclosing salaries attracts higher quality candidates, or vice versa. Instead, we found companies maintaining a flexible approach tended to receive higher quality candidates and make better hires.
Introduction
Times are tough for hiring managers. As the “Great Resignation” sends shockwaves throughout the American business landscape, millions of jobs have been left open, leaving recruiters struggling to entice applicants to open positions. Decades of wage stagnation, uncertainty caused by the ongoing COVID-19 pandemic, and the refusal of some companies to adjust to a new remote work-inclusive paradigm have resulted in hiring gridlock. As Forbes recently reported, there’s a mismatch between the millions of available jobs and the type of work job seekers are looking for. A strong majority of recruiters believe that their organizations will lose high-quality talent if they fail to shift to a remote-first culture.
On the other side of the equation, things haven’t been easy for job seekers either. There seems to be a mismatch between jobs that are available and the people looking for jobs, in addition to a disconnect between what companies are offering to applicants and what the candidates expect, which has ultimately caused many applicants to feel discouraged. What’s more, some businesses have become aware of shortcomings in their automated application systems, as reported by Vox Media’s Recode, stating that automated systems designed to weed out unqualified applicants sometimes apply confusing or unnecessary criteria. Some examples of this include requiring applicants to nursing positions to know computer programming when they really just need data entry skills.
Among these issues, some job applicants have long wondered why some companies choose not to disclose salary information in job postings. As legislation in states like Colorado start to require that employers disclose salary up front in job postings, some companies are reevaluating their hiring priorities and are facing difficult decisions about changing their policies.
It’s often true that without knowing the salary range in advance, it can be difficult for a potential employee to know if a position will provide the career and financial growth they’re seeking. However, many employers avoid posting salary information for certain jobs in an effort to attract candidates that are a great fit and want to work at the company regardless. Given today’s tight job market, are employers choosing to make a change to attract new candidates, or are they choosing to stick to the old ways?
To explore patterns surrounding the disclosure of salary ranges — or lack thereof — we surveyed 515 hiring specialists. We asked about the frequency of their company’s salary disclosure and reasons for any recent policy changes. Were changes or planned changes in state legislation such as Colorado and Massachusetts the catalyst, and if not, why did employers change their policies? We also studied how the size of a company and the level of the position being filled might influence the decision to be transparent about salary ranges in job descriptions.
Lastly, did a lack of transparency lead to offer rejections or lower-quality candidates? Keep reading to learn what strategy we found led to the highest quality applicants!
Salary Disclosure and Policy Changes
To begin, we examined how often companies disclosed salaries in job postings. Did policies vary based on industry, and had companies recently changed their salary disclosure policies?
When it came to disclosing salary information in job postings, the decision was split. Companies disclosing this information always or often represented 36% of respondents, while 38% said they never or rarely do. Propensities for salary disclosure did, however, vary based on industry. Hiring managers in education and health services disclosed always or often 48% of the time, while 31% of hiring specialists in tech and information services said the same.
Only 1 in 20 companies surveyed had recently changed their policies on the matter, although more may soon be forced to do so based on changes in legislation in states such as Colorado, Nevada, and Massachusetts. The top two reasons for these companywide changes were:
To improve transparency (67%)
To change the norm (52%)
Other, less popular reasons for these changes included applicants turning down offers, not receiving enough applicants, receiving too many under-qualified or overqualified applicants, feeling pressure from social media, and responding to direct feedback requesting change from applicants.
Reasons to Share — or Not
To better understand the split above, respondents were asked about the perceived pros and cons of sharing salary information in job postings. In particular, why do less transparent employers choose not to disclose this information?
Perceived positive outcomes of sharing salary information included attracting more candidates overall (65%) and attracting more highly qualified ones specifically (43%). As for negative perceptions, 30% of hiring managers were concerned it would force their business to raise salaries. They were also worried that it would attract less qualified applicants (21%) and fewer candidates overall (17%).
53% of companies that chose not to share salary information often did so in a conscious effort to find a candidate driven by passion instead of money. Alternatively, 49% chose to keep the information private to retain more leverage in salary negotiations. 38% avoided directly disclosing salary information out of fear it would allow rival companies to overcut their offerings, forcing the company to raise their pay rates. The same percentage feared that listing salary information would cause strife with current employees who earn less than new employees would be offered.
Experts in recruiting have called this the “loyalty discount” — a reference to the fact that with raises of only 1% to 2% for staying in the same job versus an average 10% to 20% increase for every new position attained, employees who have worked for a company for a long time are often vastly underpaid in comparison with new talent.
We also found that hiring managers tend to favor their own company’s approach to disclosing salary information. For example, 43% of hiring managers at companies that do not often advertise salary ranges believed that disclosing would force their business to raise salaries, compared to only 23% of hiring managers at companies that regularly publicize salaries. Similarly, hiring managers at more salary-transparent companies were more likely to believe that such a policy attracts more highly qualified candidates.
Company Size and Position
Does salary transparency differ based on the size of the company or the level of the position in question? We examined different sized companies and three position levels to see how they varied.
Upon surveying hiring specialists at small (10 to 100 employees), midsize (101 to 250 employees), and large companies (250+ employees), we found that large companies were most likely to reveal salary information in entry-level job postings. In fact, hiring managers at large companies were 13% more likely to do so than those at small companies.
As positions increased from entry-level to upper-level, large companies became less transparent. Hiring managers at large companies were 9% less likely to reveal salary information for upper-level positions than those at small businesses. Perhaps this is the result of a desire to attract only the most passionate applicants or to prevent competitors from poaching top talent with a better salary offer.
However, research has shown that being transparent about salaries plays a significant role in reducing salary discrimination and improving pay equity in the workplace. A 2019 review by PayScale of 1.6 million survey responses showed that the gender wage gap closed completely for women who felt their employer handled pay in a transparent way. Knowing the pay range of a position pre-interview helps to level the playing field for women and minorities when it comes to salary negotiations.
Thanks, But No Thanks
As a key part of this study, we were interested in discovering whether salary disclosure policies had a strong impact on the quality of applicants received. Are some hiring managers hindering their own efforts by declining to share salary information in job postings? For companies that choose not to be transparent, have rates of offer rejection and rescinded applications been affected? Lastly, what impact did salary transparency play in finding the right candidate?
After reviewing correlations between a company’s salary disclosure policy and the reported quality of their applicants, we found no indication that extreme salary disclosure policies affected the quality of candidates one way or another. Instead, we found that companies that maintain a flexible approach to include or not include based on role tend to receive higher quality candidates and make better hires. Companies that made a policy of always or never disclosing salary information up front didn’t differ much in the quality of their applicants, but those that reported disclosing salary information for some jobs and not for others received high-quality job applicants at roughly two to three times the rate of companies that followed stricter policies.
While some applicants won’t bother applying to positions that don’t advertise a salary range, others will wait until they’ve received an offer to judge whether the pay meets their needs. Overall, half of employers said that applicants rarely rejected offers or rescinded applications once salary was discussed, but it can happen! Within the past six months, 31% of hiring managers reported having had an applicant turn down an offer after hearing the salary. If you’re on the receiving end of a lowball salary offer, it’s a smart move to counter with a number that’s closer to your expectations. Some experts have advised always countering disappointing offers with a 20% bump.
The Sweet Spot
Unless a state has specific regulations on salary transparency, the decision to disclose salary information is at the discretion of the employer. We found that the sweet spot for hiring managers was to share this information based on their discretion and the specific role they are filling. There was a strong correlation with companies that have flexible disclosure policies receiving better, higher qualified applicants.
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We surveyed 515 respondents ranging in age from 20 to 71 in order to explore hiring manager trends in adding salary information to job postings. The mean age was 33 years old. 64% of respondents were women, 35% were men, and under 2% preferred not to say or listed other denominations, like nonbinary.
For short, open-ended questions, outliers were removed. Breakdowns for categories such as business industry or size were limited to subcategories with a sample size of 80 or higher.
To help ensure that all respondents took our survey seriously, they were required to identify and correctly answer two attention-check questions.
Survey data have certain limitations related to self-reporting. These limitations include telescoping, exaggeration, and selective memory. We didn’t weight our data or statistically test our hypothesis.
Fair Use Statement
Considering making changes to your company’s salary disclosure policy or looking for a new job? If you or someone you know would benefit from our data during this tight job market, please feel free to share this information for noncommercial purposes. However, we kindly ask that you link back to this article to provide its contributors the credit they deserve.
