Pay transparency would benefit workers, businesses
Montanans respect “honest pay for honest work.” By putting these words into action, we can provide for ourselves and our families, while creating the opportunity for a better life today and tomorrow.
Unfortunately, people aren’t always fairly compensated for their hard work. American Indians, for example, make around 77 cents for every dollar a white worker earns for substantially similar work. More disturbing, Native women are paid just half (51%) of what white men earn. White women also have a substantial pay gap, earning about 82 cents for every dollar a man is paid.
As a result of ongoing pay discrepancies, many workers earn hundreds of thousands of dollars less during their lifetimes — even though they are doing comparable work. That’s simply not right.
Equal Pay for Equal Work Benefits Montanans
Fortunately, there is a way to help Montana workers that also benefits businesses across our state. Today, 17 states have some sort of pay transparency law in place, and I have introduced legislation to ensure workers know salary or wage ranges in job postings.
Pay transparency increases information and competition — two keys to any successful marketplace — and studies have shown that transparent pay systems can reduce wage gaps, improve worker retention, and increase productivity.
More than a slogan, pay transparency has achieved results: increasing fairness and wages. In 2022, the University of Utah’s business school found that the gender pay gap was reduced by up to 45% in transparent organizations compared to those that did not disclose wage data.
Reducing the pay gap has many positive consequences. It reduces discriminatory practices. It assists families with being able to afford child care, help their kids go to college, or help their parents as they enter old age.
Employers Also Benefit from Wage Transparency
Businesses benefit from greater wage transparency in numerous ways. Transparency in communication and compensation builds trust between employers and employees and can lead to an increase in job satisfaction, better retention, and lower turnover rates and costs.
Pay transparency also can result in increased productivity. According to one study, when employees saw the higher wages of their managers, they worked harder to move up the ladder. Also, when employees know they are being paid fairly, they seek to meet their goals to justify their pay to themselves, their colleagues, and their managers.
Businesses also can benefit by being able to set wages more accurately. Instead of generalized national pay data, a Montana business will be able to compare themselves with direct competitors. Employers also note that pay transparency often improves the applicant pool for job openings. In addition, because salary and wage ranges are known, this clarity sets predictable and consistent wages for those businesses. This means better profit margins.
Finally, while I would like to see all companies embrace wage transparency, the bill I’ve proposed exempts small businesses. It also doesn’t require employees to share their wage or salary information.
Moving Forward in Montana
Too many Montanans are not being paid fairly for their hard work. The resulting pay gaps make it harder for workers to provide for their families and create a better life for themselves and their children.
Montanans tell me they want a fair shake in our state. Adopting this simple reform — disclosing pay — will benefit workers and businesses across the state. This is the trend nationally and workers expect transparency. Montana should be doing everything we can to make sure we stay competitive and fill our workforce needs. We have an opportunity to put Montanans first while increasing competition and promoting a level playing field.
Sen. Shane Morigeau, D-Missoula.