Keri Taylor still remembers the sticky note her colleague and friend left on her desk before leaving for another employer during the internet boom of the early 2000s. The young man earned his salary and a signing bonus at a Vancouver Tech company where they were both software developers.
According to Post-It, he was earning more than $15,000 a year from Ms. Taylor despite having the same job, skills and experience, she said.
Nearly two decades later, new federal and provincial wage disclosure laws aim to narrow pay gaps like the one Ms Taylor revealed by enforcing wage disclosure. The new rules are likely to help close wage disparities while giving both workers and employers improved insight into compensation practices at a time when Canada faces persistent labor shortages, experts say.
June 1 is the deadline for federally regulated private employers to report aggregated wage gap data. It is also the date when PEI employers will have to start including salary rates or ranges in any publicly advertised job vacancies.
These measures come as policy makers in a number of countries are introducing new requirements for pay transparency for companies. Austria, Denmark and Britain, for example, already require some employers to track and report on gender pay gaps. The EU is also considering wage transparency legislation that can be applied in every member state.
In the US, New York will begin requiring employers to include salary ranges in job vacancies later this year, similar to Colorado, where a similar mandate went into effect in January 2021.
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Some economists and human resources experts say the laws will give women, and other groups such as racially discriminated workers and the disabled, better leverage to obtain fair compensation.
Zoe Cullen, assistant professor at Harvard Business School, said research shows salary disclosure rules for current employees have “definitely” narrowed gender pay gaps. In Denmark, for example, one study estimated that pay transparency rules reduced the gender pay gap by 13 percent.
In Canada, a recent study of university faculty across the country found that the pay gap between men and women shrunk by about 20 percent to 40 percent thanks to the disclosure of regional “Sunshine List” salaries for high-income public sector workers.
The researchers also found that transparency requirements can lead to downward pressure on wage levels or wage growth. In her research, Dr. Cullen found that more transparency motivates employers to bargain more aggressively because individual salary negotiations are likely to have “spillover” effects on other workers’ compensation.
On the other hand, Dr. Cullen noted that forcing employers to publish salary information for job vacancies could help raise salaries overall, even though economists have only just begun to study those recent measures.
“If this is the case where a large proportion of employees have started applying for higher paying jobs, then this should, in aggregate, lead to increased competition,” she said.
This is the impact that Wendy MacIntyre, owner of ResolveHR in Charlottetown, expects of PEI rules on local businesses given the current labor shortage. “Because if everyone is struggling to get employees, you want to have the idea that you are at least in the ballpark with your competition,” she said.
And while the Prince Edward Island law applies to public job advertisements, Ms McIntyre expects it will also have an indirect effect on word of mouth hiring, which is still common in the province.
The new transparency rules affect only a small segment of workers and employers in Canada, but their impact could have wider reverberations, experts say.
While Canada’s federally regulated private firms account for fewer than 1 million employees — or less than 6 percent of the private sector workforce — they include large employers such as banks, whose HR practices tend to affect even regulated firms. for regional regulation, according to HR expert Alison Venditi.
“Everyone else has to match what they’re doing because they’re such a big part of the white-collar job market,” said Ms Venditti, founder of the job training platform Moms at Work and My Parental Leave.
When it comes to job advertisements, transparency measures such as Prince Edward Island’s measures may soon appear in other counties. Similar legislation in Ontario gained royal approval in 2018, although the province has yet to implement it. British Columbia is also considering new disclosure rules.
Meanwhile, Ms. Venetti suggests that job applicants reach out to employers’ human resources departments to inquire about salary ranges when they have not been announced.
She said companies waste time when candidates drop out near the end of the hiring process because their salary expectations don’t match the offer. She added that sharing wage information is in the interest of employers as well, especially in a tight labor market.
As for employees who have found they are underpaid, Ms Taylor said her experience holds a clear lesson.
After checking that all of her male teammates were winning her over, “I felt angry, frustrated, and lost because I was so much underappreciated,” Ms. Taylor recalled.
So when her company offered her a 2 per cent salary increase rather than raising her compensation to the average of her teammates – despite what she said were excellent performance ratings – Ms. Taylor left. I went to work for a competitor who hired the friend who left the sticky note.
“Businesses rely on the fact that it is difficult to change jobs,” said Ms Taylor, who eventually changed her job and founded Squawkfox, a popular personal finance site.
But if you point out that there is a huge wage gap and you get nowhere, “You should definitely pack up and leave.”
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