Why worker salaries are becoming ‘out of whack,’ according to Charter's CEO

Charter Co-Founder & CEO Kevin Delaney joins Yahoo Finance Live to discuss inflation, the labor market, and the NYC pay transparency law.

Video transcript

- It's a down day across the board. The Dow down by 920 points right now, 2.7% we'll round that off to at this hour. The S&P 500 also lower by 3.4%. And down right now, more than 4%, is the NASDAQ composite. You're seeing declines there racking up to the tune of 560 points. We're keeping a close eye on this as we move on throughout the rest of today's session. The deep declines continuing in what we've seen early here in 2022, Akiko, and so we'll continue to keep that in focus for our viewers.

But as of right now, we've got to get to our next guest as well. Job role, location, experience, and competitive market rates. There are just a few factors that shape compensation. And so now some new mechanisms are being enacted for salary transparency, some hybrid work considerations, and all of this as inflation outpaces that wage growth that we've been tracking, too. Kevin Delaney, who is the co-founder and CEO of Charter joins us now with more on this. And Kevin, let's just set the scene, first and foremost. Help us lay out wages in comparison to inflation, and where this plays into the broader employee-employer relationship.

KEVIN DELANEY: Yeah, so we're at the period where there are a bunch of different crosscurrents that employers are having to navigate right now. One of them, as you mentioned, is inflation. So inflation's running, as you know, at about 7% annualized, and people are, as we see the rate cycle sort of starting to come up upon us, some employers are actually trying to factor that into the raises that they're giving. The other thing that we have going is we have people who are going remote, and employers who have traditionally adjusted wages based on where you were working from actually are trying to have to figure out how to navigate that as well.

And then the other thing that's happening on top of this is that, they're in a bunch of different states and now in New York City, there are requirements that employers are more transparent, so they disclose what salaries are for each position. And the net of this is that employers are having to deal with the level of complexity around salaries as they're-- well, many of them are heading into raise-giving periods that they haven't seen in a long time.

AKIKO FUJITA: So how is that likely to play out, Kevin? I mean, I tease this as uncomfortable conversations that are happening. But you know, this is something especially a lot of the younger employees have been pushing for, not just in New York City but in other states as well.

KEVIN DELANEY: Yeah, that's true. So pay transparency has already come in places like Colorado has a law that's actually pretty similar to what we're going to see in New York, Connecticut. Some other states have less strict, but other requirements on pay transparency. The challenge is that, for some employers over time, they've made a lot of ad-hoc decisions about what people are paid, and it may be that someone got an offer to leave to go work somewhere else. As we know, there's a real war for talent, and you want to keep them and so you give them a raise. But over time, what this means is that people's salaries are out of whack for the same job.

And so for companies that have done that, they're now having to reckon with the disparity among salaries for similar positions. We also know that there are wage gaps for women and people of color are not paid as much. And so that's the goal of this legislation, these laws, is to actually try and shed some light on it. Ultimately, it should be good, but the result is that companies that haven't been really strict in their practices, got loose in their practices, they're really having to scramble. Will they give people some raises to kind of bring everyone up to the same level? That's among the measures that I know some of them are considering.

AKIKO FUJITA: A lot of people are going to be watching that one. Kevin Delaney, Charter co-founder and CEO I appreciate the time today.