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Transparency law pays dividends for Colorado

Colorado did something interesting in 2020. Its legislators passed an employment transparency law requiring employers to disclose their intended pay rates for job openings they post. In addition, job postings must report bonuses, commissions and other compensation associated with the position. Finally, employers must disclose all benefits, minor perks excepted.

So, on January 1, 2021, employers in Colorado began disclosing how much they intend to pay a prospective employee. In search of transparency in hiring, the State of Colorado inadvertently accomplished something it did not directly intend to do. The transparency requirement actually increased the labor participation rate in Colorado by 1.5%.

Being honest with people produces positive results.

Who knew?

The number of job postings has declined by nearly 10% since the new law took effect. But the number of people working has increased. Apparently, there’s something magic about laying your cards on the table. When everyone else must do the same thing, it’s easy to see how employers stack up against the industry and the competition.

Community colleges could use a similar form of transparency to help prospective students determine the value of a community college degree. If community colleges had to publish data regarding the employability and earnings of their students after graduation, that would likely provide the impetus for community colleges to improve their degree programs.

Now, I’m not talking about publishing earnings data for their graduates generally. Rather, I think it would be enlightening for schools to publish earnings data at the degree and non-degree certificate levels.

People who earned this degree reported being/not being employed in this field. Those who were employed in this field reported a starting salary of $X following graduation. The degree (or non-degree certificate) has a life expectancy of $XX.

A little transparency goes a long way

That would cut right to the chase. A degree program that reports 27% employability, an annual starting salary of $28,000 and a life expectancy of five is more likely to fail than one that has a 75% employability rate, an annual starting salary of $48,000.

That approach would also provide the school with ample data regarding effective and ineffective academic programs. After all, why waste precious instructional dollars on programs that will turn out graduates who make $13.50 per hour?

There are also morally defensible reasons for being transparent. When you ask someone to commit hundreds of hours of their time and spend (or borrow) thousands of dollars on something, they should know exactly what they get in return. Further, going to college may be a one-time-only thing. If this is the student’s one opportunity to earn a college diploma, doesn’t that student deserve the information that will help him/her make the best decision possible?

When you are transparent about what you’re asking a prospective student to spend, what they can reasonably expect to earn, and for how long, you give the buyer the information they need to make an informed decision. Buyers have these rights for every other major purchase they make: housing; car loans; credit cards; insurance policies; investments. A college degree can easily cost more than any of these, but the student has no access to accurate cost and earnings data. How can they make an informed decision about what to buy and how much it will cost without the institution being transparent?

(Unless you don’t really want them to ask those questions.)

Transparency sounds like a much better and more effective marketing campaign than anything else they may have tried in the recent AND distant past.

Photo Credit: Silvision , via Flickr