$90k to $900k: Pay transparency laws usher in baffling pay ranges
finance.yahoo.com
finance.yahoo.com
When my team is hiring software engineers, we're almost never looking for a specific level of engineer to fill some sort of specifically-defined role. We're just looking for smart people at every level. We'll hire new college grads and we'll hire senior engineers with 20 years experience. We decide what level to place someone at based on the interview and background, then make them a corresponding offer. While we obviously would like to have a balance of senior and junior people, we're not going to say "OK this time we're specifically looking for a level 4 SWE, no more, no less."
It seems like the law was designed with the assumption that companies always know in advance exactly what the person will do and exactly what quality of work will be expected. That's not realistic on software, though, where the work is constantly changing, individual projects are maybe a few months and then it's hard to predict what people will be working on beyond that. You just need to find the best people you can, at a reasonable balance of levels.
Maybe the answer is that companies should be posting one job req for each level that they're willing to hire at? But what if you only have one headcount to fill, and you would really like to fill it with a rockstar senior engineer but you know more realistically it's probably going to be a promising junior? I suppose you can post the several different levels anyway and then take them all down once you've hired someone? But then will Yahoo write an article saying you're doing this to work around the law and violating it in spirit?
(Disclaimer: I'm not a hiring manager, I'm just an engineer who interviews a lot of people. But I never understood how this law was supposed to apply to our industry.)
"Compensation policy: We're open to hiring at a range of experience levels. Our junior engineers make $90-100k. The difference between $90k and $100k is whether or not they have a degree, whether they demonstrate proficiency in our specific tech stack, and whether they have previous professional experience. We define a junior engineer as someone who has less than 1 year of professional software engineering experience. We pay a $10k premium to junior engineers living in the following high cost of living areas: SF, NYC, .... Our mid-level engineers make $120-140k ... ... Click Here to see a full list of all our employees and how much they make"
It's not that hard. Many companies have privacy policies that are many pages long, surely they can put the same amount of effort and detail into their public compensation policies.
You'll have Junior 1-5, Mid 1-5, Senior 1-5. During interviews, you'll be told you're interviewing for Junior 4 - Mid 3, and they'll tell you which level you're at once you're done interviewing.
I.e. instead of knowing which role you're applying for and not knowing what the pay range is, you'll know the pay ranges and not know the role.
From the perspective of an employee and applicant, I think this is completely reasonable. It also gives me a sense of the seniority and pay structure, which helps me make a slightly more informed decision about whether I will ever get a raise or if I'll have to quit and get a new job to get a raise.
OTOH, I still think the 90K on the low end still seems disingenuous, is anyone at Netflix making that low of a salary in a senior engineering position? According to levels.fyi, an L3 (entry-level) Netflix SW engineer makes an average of $205K base, and these job postings specifically say either L4 or L5.
We're small fish here but I'd imagine if we're thinking like this, larger companies must certainly be at least taking this into consideration. In effect, this is The State attempting to Price Fix around jobs-of-a-feather. No matter the intention, this is not The States business.
The only possible purpose of making laws like this is so that the state can try to enforce some remedy whereby we're told how much we have to or are allowed to pay someone. Who in their right mind wants to sign up for that kind of risk?
EDIT: When I say "one more reason" I mean specifically CA, its simply not cost effective to hire talent from there. CA taxes and cost of living are such that making a competitive offer to a candidate residing there is simply too costly from a compensation perspective. Plenty of people-talent exists in states with more favorable cost of living and tax schemes.
How is this the logical conclusion you arrive at? Do you as a company not have a salary range for headcount? Do you not expect prices to be posted by your vendors leading to a lack in informational symmetry and haggling during every routine interaction?
Imagine if your landlord could arbitrarily raise your rent an untold amount with no notice. You of course have options, move or negotiate. But the informational asymmetry means it is harder for you to know if you are getting a good deal if every other landlord is listing their rent as $1-100000 per month or not telling you until after you spent the time checking out the property only to find it is way outside your budget.
The time cost of candidates finding your job, doing some basic research, prepping for X rounds of interviews, possible homework, dealing with hiring managers/ recruiters is insane once you figure folks usually apply to multiple jobs. Why not just tell them up front the salary like you do for role expectations and company culture drivel? Posting honest salary bands is fine to me, say seniors will get $100-150k or whatever, but the article shows clear malice towards any legitimate transparency up front.
But in pretty much all cases, the renter incurs possibly substantial costs in time, money, and general well-being. So the mere act imposes a cost on the renter, even if the renter never pays the landlord an extra cent. Landlords know this, and if they can estimate those costs, they are able to increase rent freely as long as the present value of the rent increase is still less than the cost of moving and/or getting a lawyer. Employers have the same power, especially in tight labor markets.
There are 2 boxes in front of you each containing a tasty red apple. One of those boxes is filled with barbed wire, razor blades and broken glass with an apple in the middle. The other is just an empty box with an apple in it, and it happens to be priced lower.
Which apple do you choose?
The unwillingness of some to comply with the spirit (posting absurd ranges) of the law shows how there is no chance the information asymmetry between worker and the potential employer would be fixed by letting the companies do as they will.
I’m all for it. Less for tech workers and more for blue collar workers who don’t have nearly as much career mobility. Having them able to understand the current wider market when looking will only help them get better and more livable work.
Now if you don't want to hire from CA because people expect too high salary, then posting this salary range upfront will actually accomplish exactly what you need: people for whom the pay is too low will not respond and not waste your time.
> In effect, this is The State attempting to Price Fix around jobs-of-a-feather. No matter the intention, this is not The States business.
This has nothing to do with price fixing. You can still decide your own pay range. It's just for transparency.
> The only possible purpose of making laws like this is so that the state can try to enforce some remedy whereby we're told how much we have to or are allowed to pay someone.
No, the only purpose of laws like this is to increase transparency and thereby make the labor market more a free market. I really don't understand your concern here.
Yes, you do.
So you're ignoring potential networks in the largest and richest cities in America because you don't want to follow their laws?
It's fine to say you want to pay your employees as little as you can get away with, just be honest about it.
States can focus on attracting employers by having business-friendly taxes, minimal labor laws, minimal environmental protection, and other corporate-friendly regulations. If they can attract and retain companies then people who need work will follow.
Other states focus on attracting employees by having stronger worker-protection laws, strict environmental regulations, and amenities like education/arts/healthcare/transit. If they can attract and retain people then companies who need access to that labor pool will follow.
Depending on their constraints, industries seem to gravitate towards states on one end of that continuum or the other. For example, there seems to be more manufacturing and agriculture than the US average in employer-friendly states and more technology and finance than the US average in employee-friendly states.
Beyond the bureaucracy issues, keeping to ~2 timezones is turning into a strategic advantage at our scale. If we had to do mountain & pacific as well, things would get much more complicated.
Any yet, the majority of high-paying tech jobs in the US are still in CA, WA or NYC...
For many of them, it's probably a small compliance burden added to their already massive pile of existing ones.
Is for pay transparency. And in the vast, overwhelming percentage of the time, an employer knows precisely what they're planning to pay for a role, with extremely little variance. These cherry picked examples don't really mean a lot.
As to your imaginary firm not hiring in "CA, CO or WA", absolutely nothing was lost by the residents of those states.
It takes a lot of effort to type one sentence on a job posting.
If you're hiring you already know what you're willing to pay for the position. It really isn't that hard to write that down where people besides just HR can see.
Their 140-200k posted salary capped out at 150k.
It's possible the company you mention has a similar policy, but posted the full range for the position, not the hiring range.
When required to post a range, there are pros/cons to both approaches. One tells you what you can expect for hiring. The other tells you what you can expect going forward. Probably companies that decide they want policies like this really ought to post both ranges, for full transparency. But some literal-minded HR drone who is told to post a range will probably just grab one or the other.
It's likely that 25% under the listed maximum is the maximum they'll offer GP when paired with their resume/experience/interview performance.
Suggests that there is really a lower, across-the-board cap.
Sounds ridiculous, but my old University suddenly started doing that, and it worked pretty great.
“We need to hire someone.” “What level?” “Dunno. Experienced junior or new senior engineer could work. Depends on experience and education of the candidate.” “HR: ok, here’s a job posting at the Junior-or-senior level.” Pay range: from the minimum of the lower junior level to the maximum of the senior level as allowed by company HR policy.
We interview the candidate. During interviews we establish the candidate’s experience level and share that recommendation with HR. HR then negotiates salary and TC within the allowed HR guidelines and the selected pay band.
Something very close to this has been the process at all employers I’ve worked at—public and private.
Here’s the GS equivalent for NSPS/STRL pay scales used by the US Navy when I was a civil service engineer https://images.federalregister.gov/EN14FE11.000/original.gif...
Notice that a science & engineering (S&E) DP-III position spans GS-9 thru 11, and a DP-IV spans GS-12 & 13. So if I wanted to hire someone at the cusp between those experience levels the published salary range would be $71k-$158k. https://www.opm.gov/policy-data-oversight/pay-leave/salaries...
Big tech companies have the same kind of scales—E3/4, L3/4, ICT3/4–with wider comp ranges in the bands. It’s not malicious compliance, it’s that those are the actual ranges approved by company HR policy to they can pay at those pay band levels. I would also expect that company policy establishes guidelines for salary offers and negotiation during hiring.
So the law is asking the wrong question. It should be asking about the salary distribution of job offers accepted for comparable positions at the company. (Lots of wiggle room there still, but you get the point—it’s not about how much they can pay for a job, but about how much they do pay for that job.)
Is that legal or does that break Colorado and California law?
It's very possible that lots of people have $90k stills and only an extremely tiny handful have $700k skills.
After all that's how it is in the general population: Most people are $10/hour plumbers in terms of skills. Only a few people (we happen to mostly call them plumbers) are worth $200/hour or more.
The same is true of software.
Negotiation is typically lopsided in favor of the employer. With a range like that, they've handed you a piece of information that tilts the balance in favor of the candidate. Even better if it's a lie, it still works in your favor. Use that nugget of information to your advantage.
When I go through candidates for an open position, I find very little correlation between experience and salary demands. Propensity for audacity seems to have more to do with it.
It would count as a red flag for the senior and negatively impact hiring.
I mean, I get it. Companies don't want to disclose what they pay. But providing a relatively smaller range that better reflects what someone in that position might expect to get in reality might not be that hard, no? The $90k-$900k might look like $200k to $500k after that. Still quite ambiguous, but more reasonable.
Otherwise, I'm having a hard time believing most of the advertised positions aren't in the process of being filled by internal staff, or being recruited for with an internal team that has the actual salary range, and Netflix or similar companies that do this sort of stuff just to post jobs online because of some legal requirement. IIRC in some states you can't actually hire someone unless you've actually posted the job opening online somewhere.
Some people might want all cash; others might want mostly RSUs. I'd want to pay the first person $900K in cash and $100K in shares. I'd want to pay the second person $100K in cash and $900K in shares.
The law requires me to post only the cash portion of their compensation; from the above facts, my range is quite genuinely $100K to $900K.
So the pay ranges at companies/industries where people often have the choice between a more cash heavy vs more RSU/Stock heavy compensation can be quite drastic like the one here without actually being incorrect, though obviously Netflix/other large tech companies can be outliers. Other industries that are very bonus or commision heavy can also get away with posting very "weird" looking pay ranges as well.
> “The laws say you should post the ranges that you reasonably expect to pay,”
If I reasonably expect to pay up to $900K/yr and I find an amazing candidate that I want to pay $1M/yr, I can almost certainly do so without it being a violation of the law.
Attempting to portray Netflix as anything else other than a conglomerate doing it's damnedest to pay as little as possible is disingenuous at best, and astroturfing at it's worst. Since when was Netflix the little guy sticking up to "the man"? Netflix IS "the man".
Lack of pay transparency only benefits one side: the company's.
Netflix pays some of the highest compensation in the industry, and all cash at that.