There’s a growing push to mandate that employers post wages in job ads, driven partly by an effort to decrease pay disparities. But when it comes to one pay gap, the class origin pay gap, or the pay gap between professionals who grew up in different social classes, an unintended consequence emerges: posting wages may increase inequality, not decrease it.
For decades, the class origin pay gap for workers with bachelor’s degrees has been negligible, and it’s particularly small among graduates of the same university. The lack of a class origin pay gap is surprising, as workers from more advantaged class backgrounds tend to have more connections to other professionals, greater knowledge of the professional labor force, and more of the skills, experiences, and signs of prestige that many employers value.
Wage equality by class origin occurs, in part, because workers from all class backgrounds cannot identify which companies pay the most for the types of jobs they want. Before the increase in mandated wage posting, only 15% of college-educated workers knew a job’s pay when they applied, according to a 2012 study by economists Robert E. Hall and Alan B. Krueger. There was little way for them to gather this information: few job ads for college-educated workers posted pay, and websites that purport to publicize salary information are not always reliable.
When workers lack pay information, they must guess which jobs pay well for the type of work they want to do. And because they are guessing, workers from each class background and with various skill levels are equally likely to guess well.
Hidden wages also minimize the advantages that workers receive from their connections. Workers from more advantaged class backgrounds tend to find more jobs through their connections, but because wages are hidden, the people who help them also do not know which jobs pay well. As such, they lead them into low-paying positions as well as high-paying ones. In this way, hidden pay information operates as an equalizing force, preventing workers raised with more advantages from using them to get paid more.
Of course, wage posting is meant to minimize the gender pay gap, not the class origin pay gap. Most research on wage transparency and the gender wage gap doesn’t focus on job ads. But the studies that do suggest it’s not effective. That’s not surprising as most of the gender pay gap comes from men and women working in different jobs and from some women experiencing the motherhood penalty, neither of which is directly addressed by posting wages in job ads.
So is the answer to abandon posting pay in job ads? Not necessarily. Pay transparency in job ads may increase the class origin pay gap and do little to alleviate the gender pay gap, but it does tend to lead all workers to gain somewhat higher pay. Decision-makers contemplating whether to mandate wage disclosures or to post wages themselves face a difficult dilemma: should they prioritize transparency in pay in job ads, enhancing overall pay but at the cost of exacerbating class disparities? Or should they preserve opacity in wages, minimizing the class origin pay gap but also lowering wages across the board? Given the tension between pay transparency and maintaining a low class-origins pay gap, those making wage posting decisions will need to consider which they value most.