Should California businesses be required to post salary ranges on job listings?

California lawmakers passed legislation recently requiring all employers based, or hiring, in the state to post salary ranges on job listings.

Gov. Gavin Newsom has until Sept. 30 to sign or veto it. The legislation’s authors say pay transparency is a good thing because it is a step toward fighting gender and racial pay gaps.

Another part of the bill requires companies with more than 100 employees to show their median gender and racial pay gaps. This would go to state officials and not be made public. The original version of the bill would have made the data public.

The California Chamber of Commerce still opposes the legislation, even after the public pay data requirement was stripped, because it says the bill will undermine employers’ ability to hire and open them up to litigation if a pay scale is incorrect on a job listing.

Q: Should California businesses be required to post salary ranges on job listings?

Jamie Moraga, IntelliSolutions

NO: It exposes businesses to excessive litigation and additional compliance requirements that are costly and difficult to follow, especially for small businesses. It also undermines the hiring process and will delay the employer’s ability to hire. California legislators must stop imposing onerous bureaucratic legislative requirements that will not only drive companies out of California but will also discourage others to start new businesses. It’s legislation like this that makes California one of the worst states for business.

David Ely, San Diego State University

NO: An argument can be made that more public information on compensation could lead to greater efficiency in labor markets. However, the salary range alone may not capture all of the benefits a new hire will receive. If the business incorrectly forecasts the salary appropriate to attract prospective applicants, it will have less flexibility to adjust to conditions. If the legislation, SB-1162, is signed, businesses would become exposed to significant financial penalties for violations.

Ray Major, SANDAG

NO: Posting salary ranges coupled with employers not having the ability to ask candidates for their current salary will inevitably cause mismatches in filling positions with truly qualified candidates. It will also reduce the applicant pool. Potential candidates may opt not to apply for a position because the salary range seems too low, hindering the hiring manager’s opportunity to interview them and find that they are a good fit elsewhere in the organization.

Caroline Freund, UC San Diego School of Global Policy and Strategy

YES: Transparency is good. Qualifications, duties and responsibilities are all detailed in job postings, yet few list what workers care most about, the pay. Salary range information would give each applicant the same starting point and improve bargaining power. It would advance labor market efficiency, as workers could compare alternatives, and firms could consider what competitors are paying. The data would also be useful for economic forecasting and research.

Haney Hong, San Diego County Taxpayers Assoc.

NO: Let’s play this out. For the awesome business leaders who close wage gaps across gender and/or race, this is just another eye-rolling administrative burden that punishes good behavior. For the poor business managers who value people on physical traits rather than talent, their relationships with potential employees will be shallow anyhow and won’t endure, even if the cash became better with transparency. They’ll lose the talent and fail in the market on their own.

Kelly Cunningham, San Diego Institute for Economic Research

NO: As the California Chamber of Commerce details, the proposal incentivizes more legal actions against employers based on publication of broad, unreliable data collected for the state, undermines employers’ hiring ability, enacts inefficient administrative record-keeping requirements “difficult if not impossible to implement.” Imposes tremendous burdens on employers whether small or large to develop and update rigid job descriptions for every employee. Delays hiring process and opens employers to litigation for even slightest error disseminating information.

Lynn Reaser, economist

NO: Three reasons would suggest opposition. First, administrative costs would be high as job descriptions are constantly changing depending on the incumbents. Second, the requirement could trigger a wave of lawsuits. Third, and most importantly, the absence of comparable job descriptions would make inter-company comparisons difficult or impossible. Overall, the legislation would be interpreted as another example of California’s anti-business climate.

Phil Blair, Manpower

NO: Required is way too strong. In this tough recruiting market, jobs are hard enough to fill without withholding information that could attract applicants. Pay rate and benefits package are very important to put up front as is working remote options. Employers need to be proud of what they are paying, not secretive. We don’t need a law to tell us that.

Gary London, London Moeder Advisors

YES: A little transparency is probably a good thing, particularly in shedding light on gender and racial disparities. I think it helps both employees and employers. It also seems to me that this requirement better positions candidates to understand their pay expectations with prospective employers. I do not actually see any downside, other than a little extra record keeping.

Alan Gin, University of San Diego

YES: One of the things that makes a market work better is if there is more information available. The labor market would work better if job seekers had more information about salaries. That would improve transparency and allow workers to make better decisions. The current situation gives an advantage to employers that could be used to reduce worker pay. It also has the advantage of reducing the possibility of discrimination in terms of lower pay for some people.

Bob Rauch, R.A. Rauch & Associates

NO: Small business owners do not necessarily have classifications like large employers so let’s not force them to guarantee a certain pay range. Let’s allow them to hire the best and brightest. Currently, all employers with 100 or more employees have to provide this pay scale. Small business owners do not need more regulations as these regulations contribute to putting them out of business, rather, they need our support.

James Hamilton, UC San Diego

NO: This is another idea that might sound nice at first but doesn’t really work for every situation. At the University of California, the administration often has not told us the salary that we’re authorized to offer at the time that we’re required to advertise the job. And it sometimes ends up that the person we try to hire has multiple offers from other places that bid their salary higher than we originally planned.

Austin Neudecker, Weave Growth

YES: In my corner of the world, hiring C-level positions at our companies can require flexibility and a posted range can be either too broad as not to be helpful or discourage a candidate we may be willing to pay extra to snag. However, the upside of pay transparency across pay levels for all businesses is a greater societal good for the vast majority of positions and increasing equality. I support the direction of such bills.

Chris Van Gorder, Scripps Health

NO: I am for pay transparency and believe having the candidate understand the range of pay for the position they apply for is reasonable and can build trust and accountability. My concern is how organizations could use the data in setting their own salary ranges and pay rates. Requiring the posting of salary ranges for open and posted positions would allow organizations to assess each other’s pay, potentially leading to collusion and price fixing.

Norm Miller, University of San Diego

YES: I may be wrong on this as I may not fully understand the implications. It seems that disclosing a range will better enable the matchmaking of employers with prospects. Yet, I suspect it opens the door to the problem of salary disclosures between older and newer hires or genders. That is, when someone who has worked for several years sees pay ranges well above his/her own they will want an adjustment, which is understandable and so disclosure may lead to more equity in the system.

Have an idea for an EconoMeter question? Email me at phillip.molnar@sduniontribune.com. Follow me on Twitter: @PhillipMolnar