With the new New York City law requiring disclosure of minimum and maximum salaries for any job posting, companies are scrambling to sort out how to prepare for and handle the broader pay transparency that could bring. This comes as many businesses already need to adjust their compensation policies for remote workers and have to decide how to factor high inflation and retention concerns into their raise pool.
“This is certainly the most challenging time in my career to do this work,” says David Buckmaster, who oversees pay and benefits at gaming company Wildlife Studios. Buckmaster last year published Fair Pay and is a former compensation leader at Nike, Starbucks, and Yum! Brands. We spoke with him this week to better understand what organizations, and individual workers and managers, should be doing right now. Here is a transcript, edited for clarity:
There is a new law in New York City that requires posting minimum and maximum salaries for positions, aimed at reducing pay discrimination. Is this indicative of a trend? And what are the implications for pay transparency?
It's definitely the trend. Every company is going to have to be responsive to it, and the reality is that most companies are not ready for it. From my experience, both being inside some of these companies and talking to my peers, the reasons companies are struggling with this are not necessarily philosophical. It's for the dumbest administrative reasons. When companies are struggling with it, it's typically not because they don't think it's a good idea; it's because they probably don't have their house in order in the way that they need to. For one thing, transparency clearly shines some light on decisions that some rogue managers may have made for part of their team, but not the other part of the team.
This is the kind of thing that will naturally cause some pain before companies get this sorted out. That's not necessarily a bad thing. This is the kind of legislation that will force companies to get better extremely quickly. It's going to have to. They're struggling because they have administrative debt that they have to take care of first. One of the challenges is that a lot of your heads of HR typically don't go through the compensation team, nor do they even necessarily know how much do people in their organization make.
This is an area where—because compensation teams have typically been in a sub-department of HR—they do a lot of things very quietly, and they have to address some models to make them a lot more simple. This is especially challenging in the US because the US operates in a much more granular compensation style than any other country in the world. If you are in France, the UK, or Brazil, you don't see as much striation across compensation for similar jobs. Whereas in the US, you're going to see big differences between New York, San Francisco, and then Cincinnati. Because we're so big we've basically set up different geographic zones and many companies have gotten extremely granular, like even down to the zip-code level for hourly jobs.
Sometimes when you go to an environment of much more transparency, that stuff has to go away because it becomes almost impossible to administer. I don't have a good answer for what's going to happen on this, but my sense is that it will aggregate towards more national rates over time, in the same way that executives are paid national rates. You'll start to see some of this raising up in lower markets and topping off in other markets, except for really elite jobs—software engineers, that kind of thing.
So there are discrepancies among pay for similar positions that are the result, in some cases, of relatively nuanced and sophisticated classification of workers by geography, for example. But in other cases, it's just ad hoc differences—someone got a competing job offer, and their employer decided to raise their salary to retain them, for example. So what pay transparency does is it forces companies to look across their employee base and actually confront these discrepancies....
Yes. That minimum number is actually a lot more important than a maximum number. When you're transparent about the minimum of the pay range, it takes off the table the ability to lowball people. Of course it's a great thing. That said, pay ranges typically can be very, very wide. If I see that the market rate for a marketing manager is $100,000, companies will typically set their pay ranges even 50% or more width across from that. It might go $80,000 to $120,000. You don't know where you're going to land in that, but saying that you can't go below $80,000 as an employee is super helpful, because you can self-select into certain jobs or not.
In that sense, it will eliminate all of the companies that are bad actors or have poor HR practices that might take that job and give somebody $60,000, because they've asked their previous history and they're being cheap. That's pretty good. The challenge is, if I said my marketing managers in City A are $100,000, but in San Francisco I'm going to add effectively an arbitrary 20% of that. Now that that's public—New York is a very high cost of labor market, right? So what you're likely to see is a bunch of pay ranges that are 20% to 30% higher in that same job, compared to what the company is used to paying for that same job in other parts of the country.
People will naturally immediately start pointing to the New York rates. That will be a really interesting time for how companies respond, if they go to more national rates or if they elevate everybody else. What they do is going to be dependent on their employee mix and where people are. If you have 1% of your people in New York, you won't make that change. But if 1% are in Ohio and 99% are in New York, you'll probably make the change just for administrative reasons. It's challenging for sure, because you have to make it public, and then once you make it more public, people are going to wonder why they're placed in a certain part of the pay range. Companies are probably all trying to figure out, do we need to do a one-off pay adjustment under this new world before this stuff goes live? A lot of companies have been caught really flatfooted on this.
My guess is that, if companies don't handle this properly, they risk losing talent because employees see the maximum and wonder why they're not being paid the maximum. And that could be demotivating to them....
And every company's compensation team has some sort of policy—it's probably not very well known—about what they do in the annual raise cycle for somebody who is paid over the maximum. Some companies will give them a lump sum payment, and say we won't increase your base, but we'll give you the difference as a one-off payment to keep you within the guardrails. Some will say you're frozen effectively until the pay ranges catch up to you, and others will allow your pay to grow forever. They'll have to make those administrative choices to make sure that they're doing it consistently for everybody. That's where companies are going to have to really redesign and take a look at their practices.
Pay ranges ultimately are not competitive secrets in the way people think they are. Every company is looking at the same three or four sets of data when they do this. Company A may choose to do market 50% dollars to target, Company B may choose to do market 90th percentile—that's where that difference might come in. But we're all looking at the same source data. So once this is more public, it actually opens up a lot more opportunities for the self-service companies like Glassdoor to get more accurate data.
One of the challenges is that self-reported sites don't necessarily normalize for pay in the same way that big companies can. When companies post their pay ranges, they also need to be extremely clear about what their leveling criteria looks like. If I'm a manager at Facebook, that is a very different job than if I'm a manager at the regional State Farm insurance branch, as far as level and scope of responsibility. People are used to going off of title because they don't have anything else to go off. But if they post pay range, they need to be really clear about here's what we mean by director, here's what we mean by manager, to help people try and normalize themselves as they inevitably go from site to site to site, to their career pages, to try and figure out where they can apply or not.
In my experience, retention raises are often responsible for pay discrepancies between people in similar positions. What are the best practices there?
This is why a lot of companies have no-counter-offer policies. Companies that have big name brands with lines out the door of people who want to work for them—they just expect they're going to churn some level of talent, but they're really good about pipeline. They just say, 'Listen, if you've gone all the trouble to go this far, and we know that's not easy to get a job offer, congrats, thanks for being here. Maybe we'll see you on the other side,' and they just don't even go down that route. But a lot of companies will be more responsive because they need to keep certain talent.
There are always the the exceptions to everything, but some companies will adjust base pay—I think it could start with the context of that person's particular problem. If that person has come to you and they are paid at the low end of the pay range, but they're super high performer, extremely experienced, you've messed up, you just need to increase their base pay. Say, 'I'm sorry, we'll figure this out. We're going to adjust your pay.' And then you haven't really hurt the overall ecosystem. But if this person is paid as you would expect within your guidelines, companies typically will have policies around retention grants or retention awards that might be a one- or two-year kind of cliff-vest scenario, where we'll give you X percent of your salary a year from now, if you stick around, or enhanced stock grants, to kind of kick the can down the road with some promises. There are a lot of different ways to deal with this, but adjusting somebody's pay can be totally relevant if they have a point, and companies should be responsive to that.
What are you advising people about geographic-based compensation, including adjusting people's salaries up or down for remote/hybrid work arrangements?
I don't think you should lower anybody's pay. I think that's a recipe for disaster. I know some companies have done this, but ultimately compensation teams are having to react to the decision that sits upstream of their ability to influence, which is, are we going to require people to go back to the office or not. Everything hinges on that question. If you're saying, we expect people to be in the office in San Francisco or New York three days a week, that person can't leave the area, they're tethered there. But if you've said somebody else does not have to be, and they can be in Florida or Texas or whatever and you're paying them the same, you're naturally going to create friction on the other end with that person who you have not allowed to work remote. If their peer is now in Florida and they're netting 20% or 30% more than you, it's a lose-lose situation.
If you have some people that are hybrid, some people that are remote, unless you've been really clear on your culture, and said we don't really care where you work from—if you come work out of New York, you probably have supplemental benefits around MetroCards or whatever it may be. But if a company has said we're going to go full remote, then really it's the employee's choice. A lot of companies will figure out the right set of peer cities that they want to try and benchmark their talent for. Especially the bigger, super competitive players are going to expect most of their talent to be coming from some of the larger cities anyway, and they're going to be highly paid and highly sought after.
They might say, we're going to look at market data and either take national data and add a 15% differential on it, something basic like that. Or they might take a mix of cities and say, we'll look at San Francisco, New York, and Austin rates, and blend them together. There's all sorts of ways you can do this. But everything hinges on whether you've said that people have to go to the office or not. So much of what compensation professionals have to do is just recognize that there's always this ambient temperature of people being mad at you, no matter what you do, because everybody wants to be paid more at all times. A lot of us wake up and realize we're trying to figure out, 'How do we make fewer people mad at us today?'
That's a terrible way to be operating, but that's the reality for most of us. We didn't say you had to stay at the office three days a week—that's not our fault—but we're trying to control for that person who's now bought this nine-bedroom house in Tennessee. We want the situation to be equitable to the extent possible, but if somebody's already in your organization, they're performing well, I don't see any benefit of lowering their pay. That's like you're asking them to leave, basically.
Do you see geographic cost-of-living pay differences going away over time, especially for companies that have a liberal remote work policy?
It would have to be super critical mass for this to happen. I'm not an economist by any means, but I don't know if the remote work world is truly revolution or not yet. Is it true that most jobs can be remote? I don't think so. Most jobs are still locally based. They're like cutting hair, they're the dentist office, they're working whatever service, they're healthcare. They can't go remote. If we cut this into more elite, office-based jobs, I don't know if that dynamic is strong enough to eliminate it altogether. I do think it'll decrease over time. I work for a Brazil-based company. We're seeing some of this go global. We are seeing companies be a lot more open to offering US pay rates outside of the US, in places that you never expect. This is really fascinating to see, but again, it's just a sliver of the economy. It's probably a large percentage of your readership, but it's not 'The Economy,' with capital letters.
We have significant inflation in the US, running around 7%. What's the best practice for employers to address this as they think about compensation?
This is another area where compensation teams have been caught flat-footed. I'm 36. Most of the people that I work with are plus or minus 10 years of me. None of us has ever dealt with the US inflationary environment. We have literally never planned comp in a high-inflation environment. There's this running joke in the compensation world, 'Hey, what's your merit budget? Three percent. I can tell you what it is in the next five years.' Because it's just the most boring number that comes out every year. It's circular, since we report what we expect and then we see what we reported. We've never ever had any of this pressure, and companies are having to react to it.
Those of us who've worked in big global companies for a while have a better sense of how to deal with this. If you've ever had to do compensation for Turkey or Argentina or something like that, companies will typically break up their pay rate cycle into a couple of different timing periods. A lot of companies will say, once a year we give out raises in the US, we have a 3% of payroll budget. We're going to navigate it that way. But now we'll introduce a second pay cycle: instead of just January, we'll do January and July, or whatever. They might break it into two, one so they can monitor the environment of inflation, but also so they can spread out some of those costs. So companies are having to build up secondary processes and run this multiple times a year.
In a country like Argentina where there's 50% inflation, the most common way companies deal with it is they have two increases a year that are just pure inflation adjustments—20%, 20%, that last 10% we'll do that on performance-based distribution. That's where some of the coverage has been a bit incorrect. It just feels like semantics to me. I saw articles about a big uproar that Google's not going to give across-the-board inflation-based increases. I think the reality is their merit budget will probably cover inflation anyway. When we say, how are we trying to figure out inflation or our merit budget for this year, when we go to pull that data from our third party sources, it's usually inflation plus a little increment for performance differentiation.
It's not that they're not going to pay for it. It's just that they're going to redirect that money into high performers or people who are low in their pay range. Most people on average should at least be recouping, maybe not the full 7%, because again, the US is in uncharted territory for most of us here—but I also don't think it's totally fair to say that they're not adjusting for inflation, because most people will receive increases of around that amount.
Some employers are giving extra bonuses, given the retention climate and inflation. Would you consider a two-stage pay rise cycle this year instead, so that you can monitor things?
I'd probably break it into two, though it will depend on the context of the company. If you're a cash machine, like Google, it doesn't matter. Affordability is never an issue for them. For most companies, they probably will want to stage it if they're not going to be able to get good market data. The normal survey cycle really comes out once a year in the fall. If we're looking at it right now, they won't get fresh data. They might get anecdotal spot survey stuff, but not the hardcore real data that they want until this fall. A lot of them probably end up doing catchup investments shortly thereafter, so they understand their market position.
Most companies are never going to say, inflation is exactly this number. That's what our merit budgets are. They're always going to triangulate it based on where they show up to their market rate. If the market rates for this marketing manager example we keep using is $100,000, and we get the survey back and realize we've aged it forward and it's only $102,000 now. That's not 7%—they'll try and set their market rates toward that. They have to try and navigate affordability, market position, and then the employee experience and what they're feeling in their paychecks too. It's a difficult question, but I think most companies will probably look at splitting their cycles into a few different events, while also trying to make sure they put hooks in their top talent.
We know from surveys that people are considering changing jobs, and there's also a labor shortage in some areas. How is this impacting compensation?
A lot of companies are freaking out and throwing money against the wall right now, hoping something will stick. Companies can operate in a really robust data environment so they can understand who's top talent, or do predictive analytics to say, we typically lose people at this level around this tenure. So we need to have what you might call a 'stay interview' to say, 'How are you doing? Are you comfortable with your career aspirations? I know you're probably getting pinged on LinkedIn all the time.' Companies will proactively do that because there's the burnout feature, but there's also—and this is not my phrasing, but I love it—the bore-out.
Some people are just bored. That's where I was. I wanted to use the opportunity to take on a greater challenge, and that's why I made a move. It wasn't a compensation-related thing. With companies that are really good about that and can get ahead of that, it's not necessarily leading with comp. It's starting with, what does that person need? Do they need different projects? Are they remote, and now they haven't seen their senior leader in a year because they don't have that sort of cadence where they have opportunities to present to them? That kind of thing. You have to know your people and for some people it'll be pay, but for other people, it might not be.
We've seen minimum wage increases this year in the majority of US states. We've also seen significant pay increases, particularly for retail and other service workers. Do you see permanent and continued improvement from here for workers at the lower end of the wage scale?
I sincerely hope so. Many new laws that have been written do have automatic indexation features attached to them. So pay will increase. I grew up in Florida, so I monitor that one pretty closely as a bellwether for the rest of the country. Even Florida, it's quite red now, has gone staged $15 an hour up to 2026. Minimum wage is an extremely popular policy. I know it gets bashed a lot, but it's important policy. And a lot of states have indexed it to say it will go in these fixed stages, usually in really clean whole numbers up to a certain amount.
From there on, it'll go up with CPI. In that sense, that's new. It will increase. I'm not an economist, but my guess is that you probably won't see the growth rates as much as you did in the previous several years. We went from a truly depressing floor, where the federal minimum wage has been $7.25. That's a problem that has to get resolved, but a lot of companies were getting away with $8, $9, or $10 an hour, and they've wised up and gone $12, $15, $17. To see that level of near doubling again over the next few years? I would expect not. I would say it's kind of peaked, and that'll be the new go-forward.
One of the things that's so interesting to me is the companies that have decided to shift not just their pay approach, but their labor model also. My read of this is that companies that have intentionally said, 'We're not going to rely on part-time labor anymore,' are doing fine right now. The combination of low pay, part-time, no benefits, is a recipe for nobody showing up. Those companies who still rely on that, who haven't quite seen this yet, I think will continue to struggle. Even Walmart, for example—Walmart has very intentionally shifted to more full-time work. They're not struggling right now to hire people.
They have very intentionally said, 'Come to us, you can earn about the same amount of pay that you would have in a part-time job, but we'll give you more guaranteed hours. You'll get benefits, education attached to it.' And so the whole ecosystem is getting better. It's been a hard slog to get there. I hope more companies take that seriously, that it's not just 'What's the number?' It's the entire employment experience, including are you just treating them like people? This might sound a little corny, but if you're all focused on ESGs without the ABCs, without the basics, you'll fail. You have to get the ABCs right before any of that ESG stuff is actually going to resonate with people.
We talked about the compensation surveys that companies use to determine what the salaries are for a given position and location across their industry and peer group. But that perpetuates traditional historical inequities around jobs. For example, human resources and some other positions are traditionally more staffed by women. The pay scales across their ranks, up to senior levels, can be lower than positions in different parts of the company that were traditionally more likely to be staffed by men. Is there any solution that removes the inequities that these salary surveys perpetuate?
It's a really complex question. I have access to full data. In my role, I know what companies are paying. Coca-Cola can't call up Pepsi and say, 'What are you paying your software engineers?' That's illegal, you can't do that. What I do know is I can look at what the soft drink industry is paying their marketing managers, in complete form. I know that in aggregate, because I can look that up. But the average person does not have access to that data. They naturally will go to a Glassdoor or a PayScale to try and pull that. Sometimes it's accurate, sometimes it's not one of the things that might be helpful.
I did not write about this in the book and I'm sure I'll get flack for it from every vendor in the world. But if these surveys had to be released to the public after they're 18 months or two years old, something like that, that would probably close that knowledge gap in a big way. Then if you have no clue what your true market rate is, it could be $60,000 or $100,000, that would at least narrow that band of what we all agree are competitive rates for these roles. So there may be opportunities. I haven't really heard anybody float this legislatively, but if these things had to be released after a certain amount of time that that might help as far as the gender inequity.
I think you're right. The jobs that pay low, pay low because we've always paid them low. This is just a circular thing. People will assume it's just all supply and demand and the market, but no, I don't think so. Can you really go into any corporation and tell me that the communications or marketing coordinator is adding X value, whereas the the accountant or the entry software tester is adding an equivalent value, higher or lower? You probably can't. That's going to be very different, depending on what the company needs at that time. It's not necessarily even that, it's just that we've said these rates are this and we've basically been multiplying it from there.
This gets into a really complex question about representation. I don't have any brilliant thoughts for you on this, but I do think if people had visibility to say that these fields actually do pay this, versus these fields actually do pay that, you might see some more normalization. People might be more willing to jump from one group to another—but there's all sorts of upstream, societal expectations on these things, which are well outside of my wheelhouse. I work in HR as a guy, an area that's 70% or 80% female. It doesn't mean there aren't high-paying jobs in HR. There absolutely are. Some are paid just as much, if not more than any other function in the organization. But that stuff is not visible.
What's your top advice for someone who's not a compensation specialist, but rather a manager or a leader? There are a lot of like different winds blowing through the landscape right now. What should they be thinking abut and what should they be aware of?
I would say if you are a CEO and you don't know what the lowest person in your company makes, you need to find out. Yesterday. Because a lot of the problems that we talked about—minimum wage, salary growth, all of those things—I genuinely don't think they come from a place of malice. They come from a place of people not asking. I've been in situations before where very senior leaders have been completely floored that somebody in a retail store or restaurant makes X amount, because they just didn't know and they didn't ask. Once they ask, that then puts a different kind of pressure on the compensation team and the finance team too, to try and find the funds to go fix this.
If you're running a major retailer or a traditionally lower-wage industry, you need to go put some pressure on your compensation team and give them permission to go above their salary surveys. If you look at the salary survey for the fry cook and it's $13 an hour and you're paying that—the chain will say, 'Well, we're competitive,' and that's the end of the story. You don't have permission to go ask for X million dollars to go adjust all your fry cooks; you don't have anything to hang that on, because the market data says it's $13. But if the CEO steps in and says, 'Hey, we want to set a higher bar,' then you created that space to sort through all of the internal drama between HR and finance and operators, that all have competing interests, to make sure that people are paid at least a certain threshold amount. That usually doesn't cut through until the most senior leaders in the company put their foot down.
What is your advice for someone from an employee standpoint in thinking about their compensation right now?
The advice will be very different depending on where you're at in your career. If you're talking about low wage, or more junior careers versus more senior, for example. If there's broad advice—I'm always hesitant for people to say, go get that outside offer and show it to your boss. That is a last resort option. You have to be prepared to walk if that's the case, because a lot of companies have either no-negotiation policies or they will sadly view this as a betrayal. They might say 'I can't believe you did this, get out of here.' But I do think if you have options in the marketplace and you feel that you are underpaid, start with the career conversation and ask where you are in the pay range, 'Can you give me a sense of my competitiveness?'
Managers can take that conversation only so far before bringing in the compensation team. If you ask some of these more technical questions, usually that will trigger a review from the compensation team. In big companies, people get lost sometimes. If they look at that and they realize there's a problem, they're very likely to fix it. But if you are an average performer and you don't have that many options, I think you have to take a much lighter touch on this. You have to be very self aware of your value to the company. And then approach it through the lens of career as opposed through just being seen as wanting more money.
Are there any questions that you and your peers who are compensation experts are wrestling with right now that we haven't talked about?
I had a fun conversation about when do we have to start paying people in crypto? None of us understand it. But it is all the same stuff you talked about. How do we retain people? How do we ask for more merit budget to go fix this stuff, when finance teams typically have baked their plan a year ago, so there's no additional money? How do we retain top talent? Compensation is a lever of that, but it's not the only thing. We've touched on all of the most challenging topics—these topics are always issues. It's just that they're all very heightened right now, all at the same time. This is certainly the most challenging time in my career to do this work.
If there's one coda to pay transparency, it's that for the companies that have chosen to go extremely transparent, the more transparent they get, the more likely they are to introduce a very formula-based pay approach. The only way they can effectively administer that is if they go very formulaic. That is one reason why companies have been hesitant to do this. They don't want to have to go super formulaic with pay, because they always want some margin to be able to reward super top performers or to make counter offers. Once you start breaking formula for certain people, then it doesn't work anymore for anybody.
Basically, merit is the thing that's really hard to factor in—and I guess experience is also. Buffer is an interesting example—you go on their site and say 'I'm a marketing director in Chicago or whatever.' Then they tell you what your compensation would be, and there's no negotiation.
A lot of companies will say, especially in trying talent markets, we're not wiling to shave off the 20% of people who won't be willing to play by these rules. They want be able to expand their talent funnel as much as they can. Honestly, Buffer's approach is pretty awesome. I don't think it's right for everybody. But that tradeoff with transparency almost always comes with very formulaic pay.
Read our earlier coverage of Buffer’s approach to pay transparency. And read our briefing on Fair Pay by Buckmaster.
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