May 24, 2024 - News

In bid to reduce wage gaps, Minnesota will require salary ranges on new job postings

Illustration of  a cubicle made of money.

Illustration: Rebecca Zisser/Axios

Many Minnesota employers will soon have to include a salary range in new job postings.

Why it matters: Minnesota is the latest in a growing list of states to adopt similar laws, driven by research suggesting that "pay transparency" can reduce — or maybe even eliminate — wage gaps between men and women.

What's inside: A new state law Gov. Tim Walz recently signed will apply to any employer with more than 30 employees.

  • On any new job posting, they'll have to list the minimum and maximum amounts they're willing to pay an applicant.

The big picture: On average, women earn 21.8% less than men, according to the Economic Policy Institute.

  • The think tank found that gaps are widest in high-wage fields or jobs requiring advanced degrees. Race is also a factor, with Black and Hispanic women lagging further behind, EPI reported.

Zoom out: Colorado, Connecticut, Maryland, Nevada, California, New York, Rhode Island, and Washington state have passed similar laws in recent years, according to the National Conference of State Legislatures.

What they're saying: "Data shows companies that use transparent salary ranges receive more qualified candidates, more productive workers," the legislation's author, Rep. Kristen Bahner (DFL-Maple Grove), wrote in an email newsletter.

  • The Minneapolis Federal Reserve has also pointed out that pay transparency prevents applicants from wasting time interviewing for jobs outside their desired range.
  • The Fed also suggested the law could be really helpful for low-wage workers, who tend to underestimate how much they could be paid if they switched jobs.

The other side: The Minnesota Chamber of Commerce's pro-con list on pay transparency notes that employers may miss out on top-quality applicants if their maximum range is set too low.

Between the lines: Encouraging meaningful compliance with the law could be a challenge, the Minneapolis Fed noted.

  • In cities and states with pay transparency laws, the job-posting website Indeed has found evidence that employers are posting wider, less precise pay ranges — perhaps to give themselves more room to negotiate with talent.
  • Yes, but: While this trend prevailed in tech hubs, Indeed also found evidence that salary postings are generally getting more precise nationwide.

Friction point: Implementing these policies could be costly for employers who "have to modify existing pay practices to ensure that employee pay is in line with the pay that will be posted," Minneapolis Fed researchers wrote.

What's next: The new law takes effect on Jan. 1.

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