Why Gen Z refuses to apply for a job without salary information?

Here’s a fun fact for your next HR meeting: Forget to mention money in your next job ad and you can forget Gen Z.

According to a recent Future Workforce Study by Adobe, 85% of upcoming and recent graduates say they’re less likely to apply for a job if the recruiter doesn’t mention the salary range. 
 

Salary transparency has been a hot topic on the world of work agenda for years, prompting legislation changes across the world. In January 2023, California, Rhode Island and Washington joined other US states in legally binding companies to disclosing salary ranges. But salary transparency is still far from a given for most workers.

At a time of spiraling living costs and any hope of home ownership seems to be shriveling day by day (59% think it’ll never happen), salary is pretty important. In fact, our own research shows 68% of Gen Z desk workers are concerned their salary isn’t high enough to deal with current inflation rates, the highest among all generations.

So, if a job ad doesn’t even mention salary, can we blame them for scrolling on?

But it’s not just about that.

Let’s get inside the average Gen Z head

Gen Zs put a lot of effort and consideration into their job searches. 

When Gen X and Baby Boomers were young, getting hired was relatively uncomplicated. A vacancy found, an application form filled in and posted –then, if lucky, a single interview followed by a job offer or a polite rejection.
 

Without the benefit of Google, only a tiny few would have taken the trouble to find out what the business was doing with its investment portfolio. Or what the impact of its supply chains might be on nature. Or whether it recycled its plastic and offered an inclusive, supportive workplace culture.

Today Gen Z applicants can quickly assess a potential employer with online research – and they won’t be scoring just the pay.

It’s not the money – it’s the principles
 

Transparency is valued very highly by Gen Z. Whether it’s down to the impact of long-term exposure to fake news or the gritty realities of a post-pandemic world, they want to know exactly where they stand.

In LinkedIn’s 2022 Workforce Confidence Index 81% of Gen Z employees favored full transparency on pay. Not far behind them were Millennials at 75%. Gen X were less keen, at only 47% while just 28% of Baby Boomers agreed that salaries should be public knowledge.

This generational shift makes sense in the context of the times. The 1960s, 70s and 80s were a much less transparent time – and, for many, discussion about pay among colleagues was expressly forbidden.

Even now, some firms have contracts designed to stop employees comparing their salaries. In a 2020 study by the Trades Union Congress 18% of staff in the UK were subject to gagging clauses, but these are difficult to enforce at a time when the gender pay gap is provoking intense scrutiny and calls for full, frank disclosure. And in the US, they’ve been technically illegal since 1935.

For Gen Z, though, this is missing the point. This generation doesn’t want to work with any firm perceived as secretive. If an employer isn’t open about money, will it be open about its ethics and career progress opportunities?
 

The truth is employers are uncomfortable with releasing salary information, but it is important they consider the pay band rules and engage in transparent communications about salary from leaders to managers. It can be costly in terms of financial outlay, to level up anyone under-earning, and also in terms of workplace harmony as the inconsistencies are ironed out.

But ignoring the issue will be costlier. Gen Z are on track to make up 27% of the OECD workforce by 2025. What Gen Z wants is going to stack up like a slow, inescapable tsunami.

How should employers respond?

Pay-banding can work well. Commonly used in the public sector, a predictable, sliding scale of remuneration according to qualifications and experience gives the recruiter some wiggle room. ‘Salary in the region of’ is another way of steering in candidates.

A smart company, though, will be applying transparency in a holistic way –because Gen Z will be looking at the big picture.

They aren’t just taking on a job – they’re building their own brand and seeking out employers who mirror their values. Candidates will likely be rummaging through your pay structure, gender equality, mobility opportunities, D&I efforts, sustainability initiatives, equity practices and SDG commitments.

And the proliferation of ratings sites with posts from current and ex-employees, means an employer’s on-the-ground social and green credentials can be gleaned in moments. LHH’s Global Workforce of the Future report suggested just 58% of employees are satisfied with their company’s performance – which means 42% could be reporting the failures.

In a study in 2022 by Bupa, 64% of Gen Zs said it was important for employers to act on environmental issues. They really mean it. Enough that 31% would turn down the offer of a job with a company with poor ESG credentials.
 

In the same study, more than half (54%) of Gen Zs would take a pay cut to work for a business that aligns with their ethics. On average, they would sacrifice up to 27% of their salary.

So, no. It’s not about the money. It’s what not mentioning the money says about you.

Unlock how LHH can support you navigate the pay transparency conversations with prospective Gen Z candidates. Speak to an LHH expert today. To get more insight on workforce trends, please get a copy of LHH and the Adecco Group’s Global Workforce of the Future research.