Salary information has become less precise, and more often covers hourly jobs, finds report
The numbers are certainly – and not surprisingly – going up: Almost half (49%) of Canadian job postings on Indeed in February 2024 featured pay information.
That’s compared to 22% in early 2019.
And it’s understandable, given the growth of related legislation in various regions of Canada, along with an overall push for greater pay transparency.
But this approach has its limits, judging by the latest stats from Indeed.
For one, the salary information has become less precise — the median gap between low and high wage estimates (including postings without ranges) rose to 18% in early 2024, up from 10% five years earlier.
In addition, just 30% of postings in several white-collar fields mention pay, compared to more than 60% among jobs that predominantly pay by the hour. Pay ranges tend to be wider among higher-paying occupations, finds Indeed.
Transparency is generally lowest among occupations where annual pay is more common.
So, it raises the question: Have we reached a plateau when it comes to pay transparency, and is it still a worthwhile endeavour?
No doubt we’re moving from a system of very little disclosure to more disclosure, says Anil Verma, professor emeritus at the Rotman School of Management at the University of Toronto.
“And it will have its own attendant problems, but these problems are not insurmountable, and it's not an argument for rolling back reforms or not undertaking those reforms,” he says.
“I mean, it wouldn't be worth it — I think that it would be worth it. But each organization has to discover that for themselves, there's no law. There are some... requirements, but the bottom line is employers have a lot of leeway and flexibility in determining these practices.”
If we reach a critical mass “where it really is the norm for jobs and for employers to post pay, the main beneficiary, I think, are jobseekers,” says Brendon Bernard, senior economist at Indeed.
“For a long time, there has been this lack of information in a key aspect of the job search process, and we're finally seeing it start to change, so hopefully this results in a more flexible, efficient labour market.”
Provinces legislate pay transparency
Of course a big reason why transparency in job ads has risen is legislation, with new laws in Ontario following that of B.C., Newfoundland and Labrador, and P.E.I.
For example, the share of B.C. postings with salary information jumped from 49% during the third quarter of 2023 to 76% as of February 2024, a full 32 percentage points higher than the rest of Canada, finds Indeed.
And Indeed research has found that job postings that include wage estimates receive more applications per day, and are active for shorter periods of time, compared to postings that don’t do so.
When the Canadian labour market has been really tight, with many job openings across all areas of the economy, says Bernard, “standing out, in this case by including pay information, was an important strategy when it was tough to find candidates.”
“Jobseekers want to know, and if you're putting that information out there, then jobseekers right away have a better idea of whether it's worth their time to put in the effort, which is often a lot of effort, to apply for a job,” he says.
Does lack of precision impact attraction?
But the pay information provided isn’t as precise as it used to be. In particular, fewer postings advertise exact pay levels, with more quoting ranges instead, finds Indeed.
In early 2024, 21% of job postings that included pay provided an exact level, down from about 40% in 2019. Exact pay is more common when pay is quoted in hourly terms (31% exact) rather than as annual salaries (10% exact).
While “still useful,” the ranges are pretty wide, says Bernard, though he adds more complex jobs might need a wider range, for “some degree of flexibility.”
In being transparent, existing employees can become aware of what new employees are being offered, he says, so “that could be something that employees are a bit wary of.”
However, less precision makes the transparency less useful for jobseekers, and it raises the question: “Do employers who are posting these larger wage ranges, are they still seeing the recruitment benefit that historically posting wages has brought?” says Bernard.
“Or does the benefit to attracting jobseekers come from being more precise in your offered wages? That's an open question, I'm not sure of the answer.”
Having such a broad range for salaries is not effective and is “meaningless,” says Verma. “I mean, when they give a very wide band, they're just hiding behind this screen.”
“It's just that the employers are more used to having their way. And if employers can have their way, they would rather keep more secrets — less disclosure is better for the employer because it gives them more flexibility, basically, and more control.”
Pay equity through pay transparency
Another reason why a lot of employers started boosting transparency around pay is to promote an equitable workplace, says Bernard.
“Starting off the salary negotiation process and potentially providing more of a floor for some jobseekers who would be uncomfortable to negotiate pay, posting wages and having firms compete across each other for not being under market, is one way that can help job seekers,” he says.
“That has the potential to impact gender wage gaps, but I think that channel is a bit more subtle than other aspects, like… more directly comparing other forms of salary transparency, where for instance, employers are actually looking at the pay of their existing staff and comparing that across different dimensions.”
The whole push for transparency started back in 1996, says Verma, when the Ontario government thought disclosure would act as a restraint on wage demands by publishing the “Sunshine List” of public sector employees.
“It was created in a way to kind of name and shame public officials drawing exorbitant salaries,” he says. “So the government said… ‘We will publish anyone who makes more than $100,000.”
Several HR leaders were on Ontario’s Sunshine List for 2022.
However, this had the exact opposite effect, says Verma, because when people learned about their colleagues’ compensation levels, they asked for more money.
“Salaries can always be increased, but it's very hard to roll them back. So disclosure had the effect of moving everyone’s salary upwards,” he says. “Whereas more disclosure would create more equity, feelings of equity, it also has this side effect of pushing up wages.”
But that’s a one-time effect, he says.
“In the long run, it's better for us — better for the economy and society — to have more disclosure. So I'm in favour of disclosure, although not individual salaries. This is where the Sunshine List is wrong — it named people and named their weighted dollar amounts and so forth. That serves no purpose, especially when you report it right down to the last dollar.”
Job evaluations around compensation
Instead, this should be an opportunity for employers to do a better job evaluation, says Verma.
“You have to really ask, ‘What is this job worth to the organization?’ and not focus on the individual per se. Now, there are no doubt exceptional individuals, people who perform well above their average for the group — in that case, you can reclassify the person, say, ‘Look, he's an engineer and the team leader,’ and then you can move them into the next band.
“And that would be transparent. Everyone would know that he has gone from this lower band to the higher band. And… it would be justifiable; it would be seen as being equitable.”
And “in the age of merit pay,” things like bonuses should also have bands, says Verma. So if someone is exceeding the standards, they will be given a bonus of 10 to 20%, for example, and if they are considered “amazing,” the bonus can be even higher, at the discretion of the manager, he says.
“That would create some ambiguity but at least it gives you structure. If something works for 98% of the employees, it's still a good system, and there can be 2% exceptions.”
