Aon plc, a leading global professional services firm, recently released results from its 2024 North America Pay Transparency Readiness Study, revealing that 75% of employers are not ready for pay transparency laws, which are currently or will be in effect in 14 U.S. states and four provinces in Canada by the end of 2025 and in all EU countries by the end of 2026.
Pay transparency laws aims to close the gender wage gap, and the study highlights the challenges in reaching that goal. The study, which includes survey results from 626 U.S. employers with employees based both inside and outside North America, shows only 51% of employers have conducted an independent pay equity analysis. Of those that conducted this analysis, 84% identified pay equity gaps and disparities. Only 34% of those employers have added additional funding to correct them.
“The rise of pay transparency and pay equity initiatives reflects a broader cultural shift, particularly among younger employees,” says Brooke Green, head of talent solutions for North America at Aon. “What was once considered impolite to publish salary information has increasingly been recognized as a practice that reinforces and exacerbates pay gaps. Employers who align with these new regulations sooner rather than later will be better positioned to address wage disparities, promote fairness, and empower employees to make informed career decisions.”
Additional key findings from the report include the following.
- Just under one-fifth (18%) of employers say they feel ready for pay transparency. The industries with higher levels of readiness include retail and e-commerce (33%), financial institutions (21%), manufacturing (20%), and professional and business services (20%).
- Over half (63%) of employers do not currently communicate salary ranges to their employees. Of the 37% that communicate salary ranges, 61% only do so where required by law, 23% throughout the U.S., and 16% globally.
- Most (81%) employers publish salary ranges on job postings, indicating a gap in how employers communicate with their employees and prospective talent. Of these, 34% publish a portion of the salary range where legally required, 20% list the full salary range by location, 18% provide a portion of salary range by location, and 10% publish the full salary range by location.
- Approximately 69% of employers have not implemented a pay transparency communication strategy.
“More than half the U.S. population lives in places with some form of regulation, and more than 60% of the Europe will be covered by the EU Pay Directive,” says Kelly Voss, head of rewards and career advisory, North America at Aon. “This, coupled with the growing compliance concerns and the social movement toward pay transparency, is spurring more employers to act and become more transparent with their total rewards strategies. Those organizations that are out in front will have a more compelling employee value proposition. This will not only increase engagement among their current workforce but will be moe attractive to prospective employees.”
As pay transparency rises in importance, employers are making plans for 2025 employee raises, portions of which may be used by some companies to address pay inequities. Average overall salary increase budget for 2025 is predicted to be 4.6%, roughly the same as 4.7% reported this year in the U.S., according to data from Aon’s Salary Increase and Turnover Study. This includes merit increases, promotions and market adjustments. Aon also reported 20.7% of U.S. employees left their jobs, of which 11.8% departed voluntarily in the first six months of 2024.