Salary Transparency vs. Pay Equity: What’s the Difference and Why It Matters

The conversation around compensation has reached a tipping point in today’s workforce. Between legislation mandating salary ranges on job postings and growing employee demand for equitable treatment, companies are navigating a rapidly evolving landscape. But in the push for fairness, two terms are often used interchangeably: salary transparency and pay equity.

While closely connected, they are not the same. And understanding the difference, as well as how to prioritize both, is critical for building trust, retaining talent, and achieving long-term organizational success.

Defining the Terms: Salary Transparency vs Pay Equity

Salary Transparency

Salary transparency refers to how openly an organization communicates compensation-related information. This can range from publishing pay bands for roles to sharing how salary decisions are made. Transparency empowers employees with knowledge and can reduce the mystery and speculation around pay structures.

Pay Equity

Pay equity ensures fair compensation by providing equal pay for equal work, regardless of factors like gender, race, age, or other personal attributes. It involves uncovering and addressing systemic pay disparities to promote workplace fairness.

While transparency is about sharing information, equity is about ensuring fairness.

Why One Doesn’t Guarantee the Other

A company can be transparent about pay but still have inequities in its compensation structure. Conversely, a company might achieve pay equity through audits and corrective measures but remain opaque about how salaries are determined.

"Pay equity answers the question, ‘Am I being valued the same as others?’ But salary transparency gives people the power to ask that question in the first place," says Janel Hunt, BGSF's Executive Vice President of Human Resources. "Without both, employees are left to navigate their worth in the dark, unsure if silence means fairness or masks injustice. True equity isn’t just about getting the numbers right; it’s about creating a culture where fairness is visible, challengeable, and real."

That’s why organizations need to pursue both simultaneously. Transparency builds trust; equity builds fairness. Together, they create a culture of accountability and inclusion.

The Current Landscape: What the Data Tells Us

According to ADP’s 2025 People at Work report, there has been a modest improvement in perceptions of pay fairness, with 27% of global workers feeling underpaid in 2024, down from 31% the year before. However, disparities persist:

• Women are more likely to feel underpaid (28%) than men (23%). 

• Older workers report higher dissatisfaction — 34% of women aged 55–64 say their pay is unfair. 

• Certain industries, including education, healthcare, and mining, see greater gender gaps in pay perception.

• Geography matters, where workers in countries like South Korea and Sweden are more likely to report unfair pay than those in India or Vietnam. 

These insights reveal that while salary transparency might be improving, actual pay equity remains elusive for many.

What Employers Can Do

1. Conduct Regular Pay Audits

   • Evaluate compensation across job roles, departments, and demographics to identify gaps.

2. Establish Clear Compensation Frameworks

   • Develop structured pay bands, define merit-based increases, and eliminate subjective decision-making.

3. Communicate with Clarity

   • Educate managers and employees about how compensation decisions are made. Ensure consistency in messaging.

4. Support Employees with Real-Time Adjustments

   • The ADP report notes that employees who received a raise in the past year were 2.3x more likely to feel fairly paid. Timely action matters.

5. Prioritize Equity Over Optics

   • Transparency without equity can backfire, especially if employees discover inconsistencies or favoritism.

     
     

The Bigger Picture

In an age where talent is global, retention is fragile, and social consciousness is rising, fairness in pay is a business imperative. Today’s workforce is more informed, vocal, and values-driven than ever before. Job seekers actively research company compensation practices, and employees are unafraid to challenge inequities or take their skills elsewhere.

As a result, organizations that align transparency with true equity will cultivate environments where people feel valued, motivated, and loyal. By prioritizing both what they pay and how they communicate it, these companies foster stronger cultures, attract top talent, and build resilient workforces that can adapt and thrive in a competitive, ever-evolving market.