This month the new pay transparency law took effect in New York. Workers in NY are now allowed to compare the salaries offered for the same job at different companies — an unintended consequence of the new pay transparency law that came into effect Nov. 1.
The purpose of this new law was to enable employees to see how roles are valued, however, this may have somewhat backfired, as total compensation isn’t being considered i.e. benefits and bonuses/commissions. Economists are warning job seekers to use discretion when drawing final conclusions from salary ranges, as final salaries also depend on experience.
“New York may be leading the way with pay transparency, but its minimum wage is not as high as many other states, since it’s not linked to inflation. Indeed, the purchasing power of its $15-an-hour minimum wage has dropped by 15% since 2018.”
The real dilemma – jobseekers tend to put their focus solely on money instead of considering a company’s total compensation package. Looking at a total compensation package can dramatically alter one’s outcome. Here is an excellent example:
Employee ‘A’ is paid $2.00 an hour more than employee ‘B’ and incurs a deduction of $525.00 monthly for family medical coverage. Employee ‘B’ (a new hire) is offered $2.00 less an hour, but with 100% medical coverage as a benefit. Employee A’s total out of pocket annual expense is $6,300.00 for medical, compared to Employee B’s $4,160.00 less in annual salary. Taking the offer of Employee B’s reduced salary rate would save the employee $2,140.00 annually, because even though the offer is paying $2.00 less an hour, full medical coverage is being paid by the employer, not the employee.
With inflation top of mind, many jobseekers are solely focused on their wages and potentially leaving a lot on the table. The focus needs to be on “total compensation and rewards” rather than just annual salary and employees need to investigate all the benefits being offered. Bonus incentives, profit share and matching 401k plans can produce a substantial cash flow over time. There are also other factors to consider like: hybrid vs. fully on-site, job commute, and personal preferences that might appeal to certain lifestyles.
How do you measure non-monetary rewards like flex time, hybrid work, culture alignment, and mentorship from a great boss? How do we monetize things like a learning culture, mentorship opportunities, and a company’s growth model to learn and enjoy internal promotions? Should we measure promotability and average tenure? If you end up with a few more dollars in your pocket but work for a terrible boss in an unhealthy culture – Is it worth it?