How Colorado’s Pay Transparency Law Affects Labor in the State
Early data suggests more people want to find work in Colorado now that employers are required to list salary ranges on job postings.
That’s even despite a drop in job openings in the state, according to new research from Recruitonomics, a site that analyzes labor market data.
The July analysis examines the impact of Colorado’s Equal Pay for Equal Work Act, which went into effect in January 2021 and requires employers to disclose salary range on all job postings .
Two notable things happened in the first year after the law took effect, research author Sam Kuhn told CNBC Make It: First, daily job postings on Indeed fell by 8.2% in Colorado compared to neighboring Utah (which was chosen as the control for having similar demographics and economic characteristics).
The drop in jobs in Colorado matches reports that companies were actively barring workers in the state from applying for certain remote jobs, or taking the job elsewhere, to avoid the posting requirement.
Second, the data shows that there was a 1.5% increase in Colorado’s labor force participation rate compared to Utah’s.
The researchers note that Colorado’s surge in workers cannot be entirely explained by the passage of the Transparency Act – it also aligns with the general hiring boom in the US as economies recover Covid shutdowns, although in many cases businesses cannot hire enough. Compared to Utah, however, it appears that workers in Colorado were more eager to work.
Nor does the analysis examine whether the law achieves the goal of reducing racial and gender pay gaps.
That said, Recruitonomics co-author and research director Andrew Flowers says analysis demonstrates that such transparency laws are a win-win: research shows employees are overwhelmingly in favor of pay transparency practices , and at least in this case, it appears Colorado employers have had a better time filling vacancies in a tight labor market even as the number of job openings dwindled.
“Employers willing to bear the cost of putting their cards on the table and showing the pay scale are likely to see more job seekers and less competition,” Flowers said.
Like more states and cities Passing similar transparency laws, including in California and New York, Flowers expects companies will find it harder to restrict their hiring markets to circumvent compliance.
“The more it becomes collective action toward pay transparency, the less you’ll see a drop in assignments,” Flowers says. “They’re not going to pull out of California or New York.”
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