Americans should be able to talk about money freely — more than any other topic out there — says financial expert and author Suze Orman. Right now, that’s far from reality.
“God forbid, we should know how much money everybody makes … That, in my opinion, is how the system keeps us down,” Orman told MoneyWise in a recent interview.
While many employers have long encouraged a “culture of secrecy” around wages, that is beginning to change. Some parts of the country now require companies to make salary information publicly available on job postings.
New York City’s pay transparency law just went into effect this week, joining over a dozen other states and cities that already have similar legislation in place. Job hunters can now find out how much the biggest companies — from American Express to Amazon — are offering for posted roles in the Big Apple.
Yet employees also have a role in preserving the money taboo, and Orman says keeping quiet about money could be costing you.
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WATCH NOW: Suze Orman talks about the importance of being open about money
NYC joins other states and localities with pay transparency law
NYC’s new law was originally meant to kick in months earlier in May, but pushback from companies meant it was delayed until November.
The law states that beginning Nov. 1, “employers advertising jobs in New York City must include a good faith salary range for every job, promotion, and transfer opportunity advertised.”
The New York City Commission on Human Rights explains that this “good faith” range must represent the minimum and maximum wages the employer “honestly believes at the time they are listing the job advertisement that they are willing to pay the successful applicant(s).”
The state of California also made headlines earlier for signing a new pay transparency law into place as well — expected to go into effect Jan. 1, 2023.
“I think we’re in a moment of cultural change in the last few years, where employers are realizing that it’s actually to their advantage to be more transparent about pay,” says Andrea Johnson, director of state policy, workplace justice and cross-cutting initiatives at the National Women’s Law Center, based in Washington, DC.
Johnson adds that the country is still contending with a tight labor market, but employers may actually attract workers by posting salary ranges. U.S. job openings unexpectedly rose to 10.7 million in September, despite experts predicting a decline.
Orman adds that it’s important for employees to be transparent with each other, as well.
“Because you don’t know if the person next to you who’s doing less than you is making more than you. So yeah, we should be able to talk about money more freely than any topic out there. Because the topic of money is what affects every single one of our lives in every possible way,” Orman explains.
Why it’s important to talk about money
The personal finance celebrity acknowledges it can be hard for people to open up about money, especially in the workplace.
“There’s a hesitation about how much you have, how much you don’t have. and money is still this topic that’s very difficult to personalize and talk about,” she explains.
“And one of the reasons it’s very difficult for people … look at what everything costs today and then look at wages. They are not keeping up with what people need.”
In fact, despite growth in wages, workers are seeing a shortfall when compared with the effect of inflation on everyday consumer goods and services.
The median decline in real wages is currently sitting at a little over 8.5%, reports the Federal Reserve Bank of Dallas.
The Fed hiking interest rates has also made it more expensive for consumers to borrow, putting even more financial strain on Americans.
The decline in purchasing power is likely worse for women, who earn 83 cents for every dollar a man makes and often pay more for products. Department of Labor data shows that most racial minority groups earn significantly less on average compared to white workers as well.
Experts like Johnson have pushed for pay transparency laws in order to help fight gender and racial wage gaps.
California will be the first state to require companies with more than 100 employees to show their median gender and racial pay gaps.
“Transparency is power,” Johnson says.
Companies are finding loopholes
There’s been some dispute over whether these pay transparency laws will provide much benefit to workers.
“There’s definitely a culture of secrecy in the United States,” says Johnson.
“That comes from a lot of different directions. But it’s definitely coming from employers that have long felt that it’s to their advantage to keep pay and how they set pay secret.”
Companies in NYC have been finding loopholes, such as using external search firms or hiring workers through word of mouth instead of job advertisements, reports CBS News.
And some NYC firms have posted jobs with very broad pay ranges. For example, The Wall Street Journal is hiring for an executive producer role with a salary range of $50,000 to $180,000 for applicants in the city.
A few companies have reportedly been barring remote work applicants from Colorado, which stipulates that even companies that aren’t based in the state follow its transparency law for Colorado applicants.
And that said, depending on where you live or where you apply for work, each state or locality may have slightly different rules around pay transparency.
Colorado requires employers to include benefits, bonuses, commissions or other compensation on job postings, which NYC’s new law doesn’t mention.
Some states require salary postings on job postings, while others only provide this information upon request or during the application process. Some, like Colorado, may require companies hiring outside of the state to adhere to the same rules.
However, NYC’s new law could be ushering change across the country — Bloomberg reports that several major companies, like Google and IBM, are now posting pay ranges on all their U.S. job postings.
“That’s how you get real about money,” Orman says. “By talking about the truth of it.”
WATCH NOW: Full Q&A with Suze Orman and Devin Miller
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Source: https://finance.yahoo.com/news/suze-orman-says-workplace-taboo-160000066.html