Remote Work, Coloradans Need Not Apply
Colorado’s Equal Pay for Equal Work Act came into effect in January 2021. It aims to increase workplace transparency by requiring, among other things, companies with Colorado-based job openings to list good faith salary compensation ranges on job postings. (It also increases worker protections, for instance, by prohibiting employers from enforcing policies that forbid employees discussing their salaries amongst themselves, but that won’t be the focus here.)
The goal of the act’s sponsors and supporters was to increase transparency and reduce the information asymmetry between employers and applicants regarding expected compensation. By pulling more salary information into the open, the act also aims to reduce pay disparities between men and women, promising “equal pay for equal work.”
Instead, some companies are refusing to consider Colorado applicants for their remote positions. The list includes leading companies across many industries, such as Airbnb, Box, Eventbrite, Hilton, Johnson and Johnson, Nike, Oracle, Sherwin Williams, and Twitter. (You can see a user-submitted database of such companies and their anywhere-but-Colorado job postings at: https://www.coloradoexcluded.com/.)
Doing so enables them to avoid posting a salary range and maintain a lower level of transparency.
I’ve written about transparency from a few angles before and thought this would be a useful situation to dissect. So, what can we learn from this policy and how some companies have reacted?
Firstly, this seems like a clear case of an unexpected outcome for the act’s designers. State Sen. Jessie Danielson, a sponsor of the bill, appears caught off guard in her comments on such companies’ actions.
“It looks to me like these companies are intentionally excluding potential employees right here in the state where we still need these jobs because they don’t want to have to post their salary information,” Danielson said. “It’s just wrong.”
It may be wrong or not, but at least some companies choosing simply not to play ball in Colorado should have been anticipated. In value-based pricing, it is critical to remember that your customers always have alternatives to your product, even if that option is to buy nothing. Similarly, it should not come as a surprise that certain companies may choose, essentially, to buy no labor from Colorado.
The Value of Opacity
The companies who have opted out of Colorado are indicating that they value the opacity of their salaries more than they do access to Colorado’s workforce.
Now, Colorado isn’t enormous—it’s not California, Texas, or New York (and anyone you ask on the street here will say that’s a good thing!). However, Colorado is growing quickly, especially with regards to educated and skilled workers. And companies have the incentive to hire the best workers for remote positions irrespective of geography.
So, opting out of the Colorado workforce demonstrates that, at least for the companies above, they place substantial value on keeping salary transparency out of their job postings. Presumably for human resources management and/or competitive reasons, they want to keep such discussions behind closed doors.
On this point, I see some similarities with price and pricing transparency. As I’ve argued, such transparency is less of a moral good and more of a deliberate differentiation. In the same way, some companies choose to have greater compensation transparency in their organization. Greater transparency may create a stronger sense of buy-in, trust, and fairness, and some companies may choose to pursue that internal culture. (I work at one such company.)
Working with Allies
With any successful change management, it is critical to build support with a wide range of stakeholders. As the adage goes, “if you want to go fast, go alone; if you want to go far, go together.”
Colorado could have increased the efficacy of its policy by working with other like-minded states to act in concert with each other. That would create a larger pool of applicable labor and increase the cost to companies who choose not to avail themselves of that pool.
Colorado is an early mover here—other states will likely enact similar policies in the coming years. If the Pacific Northwest or California were to join suit, many currently anywhere-but-Colorado companies would likely choose to comply rather than be shut out of the labor force.
In the meantime, companies seeking remote workers will have to decide what is more valuable: Colorado labor or job posting salary opacity. Whichever option companies choose gives us a fascinating glimpse into their internal calculus.