Pay Transparency

Background

Generally speaking, “pay transparency” is the practice of being transparent about compensation for a particular job or role. For employers, that could look like adding salary ranges to job postings, for example.

Many US states have started enacting pay transparency laws in recent years, while some Americans have begun speaking more openly about their salaries. Talking about money (let alone compensation) has historically been taboo in the US, so efforts toward pay transparency have been controversial at times.

While proponents argue that pay transparency laws have forced employers to pay their employees equitably and can help reduce the wage gap, critics say that the practice brings up privacy issues and leads to tension in the workplace (more pros and cons here).

History of the Pay Transparency Movement

Talking about money hasn’t always been anathema in the US.

Some historians argue the taboo originated when Americans began correlating their intrinsic worth with their salaries in the late 1800s and early 1900s. Economist John Bates Clark’s theory that “everyone earns what they produce” was popular at the time, as wealth disparities increased and the nature of labor in the US evolved post-industrial revolution.

While the National Labor Relations Act issued protections for employees discussing their salaries with coworkers and others in 1935, the culture of pay transparency in America didn’t begin to change for many more decades.

Talking about money is still largely taboo in the US. However, young people have increasingly been sharing their salaries with one another in a bid for pay equity since the early 2010s. Some experts suggest that macroeconomic events such as The Great Recession in 2008 and the COVID-19 pandemic in 2020 contributed to this slight cultural shift, whereas others argue that social media has led millennials and Gen Z to be less private than their predecessors (more reasons why here).

As the culture shifted, so did legislation. California became the first state to enact a pay transparency law in 2018. This early legislation (which has since been updated to require that employers must disclose the salary range in all job postings) originally prohibited employers from asking applicants about their salary history and required them to provide pay ranges if applicants requested them.

As of March 2025, 14 states had passed pay transparency laws, and more were considering them. Some localities have their own pay transparency laws, such as Cincinnati, Ohio and New York City.

How It Works

Because most pay transparency laws are currently enacted at the state level rather than the federal level, they don’t all look alike. For instance, employers under Colorado’s pay transparency law have different requirements than California employers do.

Specifically, Colorado’s current pay transparency act requires Colorado employers to not only notify all internal employees of new job opportunities within the company, but also include the opportunity’s corresponding pay scales, job description, and application window in the job posting itself. Colorado’s law also requires employers to list benefits and any other compensation (like bonuses) in addition to the base salary. See every state’s pay transparency laws here.

As of 2025, federal pay transparency legislation had been pending in Congress for years—more on the status of the bill here.

Impact

Research on pay transparency legislation’s impact is limited, given how recently these laws have been enacted. However, some early studies suggest that pay transparency legislation could help decrease the gender pay gap, increase labor participation rates, and reduce employer recruiting costs.

Another study found that increasing pay transparency could also lead to a decrease in worker bargaining power that results in lower average wages for employees.