Hello, and welcome back to Inc.'s 1 Smart Business Story. The salary range on a job posting seems like a minor detail, but researchers discovered it quietly shapes who applies, who negotiates, and ultimately who gets paid more over an entire career. A Harvard Business Review analysis of nearly 10 million job postings found that while the average range spans $38,000, some companies post spreads exceeding $100,000 for identical roles. Most hiring leaders have no idea this number is doing anything at all. The fix that nearly closed the gender gap entirely was a single sentence.

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BY MARIAPAULA GONZALEZ, EDITORIAL INTERN

A simple tweak in a job posting has surprising effects on who applies and who negotiates.

When California passed its pay transparency law in 2023, Tesla listed a senior software engineer position with a salary range of $83,000 to $418,000. At Netflix, the same role was up for grabs at $90,000 to $900,000.

These wide salary gaps aren’t unusual. A recent Harvard Business Review analysis of nearly 10 million U.S. job postings found that while the average salary range spans $38,000, the spread for similar roles at different companies can vary from $20,000 to over $100,000.

Since 2020, pay transparency laws have spread rapidly. As of last year, 15 U.S. states and Washington, D.C., require employers to disclose salary information in job ads or during interviews, aiming to give candidates more information and help close gender and racial pay gaps. But most laws only require a range, leaving the width largely up to the employers’ discretion.

Companies post wide pay ranges for a number of reasons: Roles may span experience levels, remote work can require location adjustments, and bonuses or equity can widen total pay. Under laws like New York City’s salary transparency rule, employers must list a “good faith” estimate of what they’re willing to pay, but regulators haven’t defined a strict limit on how wide that range can be.

Researchers found that the width of posted salary ranges can shape who applies for jobs and how they negotiate. Across four studies, women were more likely than men to prefer roles with narrower pay ranges. In an analysis of U.S. job postings, wider salary bands were associated with lower female representation, even after controlling for firm characteristics.

The pattern appears linked to risk aversion as wider ranges signal more uncertainty about final pay. Applicants who chose narrower-range roles negotiated less aversively, asking for less money when they countered—about $3,600 less in one experiment. Because starting pay compounds over time, the findings suggest how companies set pay ranges can influence both workforce diversity and long-term earnings.

“Salary ranges act as anchors,” the researchers wrote. “When the posted range is $60,000 to $80,000 and you receive an offer of $70,000, it feels close to the ceiling. When the range is $40,000 to $100,000 and you receive that same $70,000 offer, you can see room above you. That visibility shapes expectations, satisfaction, and willingness to push for more.”

In their study, the researchers tested adding a bit of context to the posted salary range. Some applicants saw a short explanation noting that most new hires start around $65,000 and that final pay depends on experience, skills, and role responsibilities.

That small addition made a measurable difference. Before, women were roughly 10 percentage points more likely than men to choose narrower-range roles. After reading the context, the gap nearly disappeared, and the gender difference in counteroffers also closed.

For senior leaders looking to improve their hiring process, the researchers highlighted three key takeaways:

If a salary range is wide, clarify where typical starting offers fall and what factors determine final pay. “This signals that compensation is structured rather than discretionary, and it can reduce the uncertainty that disproportionately deters women,” the researchers said.

Make sure a posted range truly reflects a single role and level. Extremely broad spans may unintentionally signal unpredictability.

Compliance alone isn’t enough. How you frame pay ranges shapes who applies and how they negotiate. “Companies that care about attracting diverse, high-caliber talent should view pay-range disclosure not as a legal checkbox but as a strategic communication about what kind of employer they are,” the researchers wrote.