What is Competitive Pay in 2022?

By TERRA Staffing Group

Posted on February 23, 2022

Man in a hard hat sitting at a desk with his manager

Job-seekers often see the phrase, “competitive pay” on job postings, but very few people know what it really means. Competitive pay is a vague term, and intentionally so. There’s no one-size-fits-all pay rate for any job, so many employers default to this term as a catch-all. Wages, commissions and salaries are dynamic and depend on several factors, including:

  • Work experience
  • Education
  • Skills and certifications
  • References
  • Industry
  • Job title
  • Management versus individual contributor role

“Competitive pay” may sound like a safe description for a job posting, but more and more, job-seekers are seeing this phrase as a red flag. In an environment where competition for talent is increasing and employers are feeling more wage pressure, should employers use this term on job postings, or give a real pay range? There are pros and cons to including the term, and employers should be strategic with their compensation messaging.

What Does “Competitive Pay” Mean?

The term “competitive” means a pay rate that meets or surpasses the market value of the role. For HR professionals, competitive pay has no actual definition or standard. Job-seekers have caught on to the vagueness, and without a meaningful comparison, the phrase is seen as empty. According to a study by Paychex, 70% of those surveyed reported low salary is the primary reason they have left or would leave a job. Job-seekers are unlikely to apply for a job for less money, and the term, “competitive pay” is far from attractive. 

Some factors that affect actual competitive pay include:

Additionally, real competitive pay is made up of more than a role’s “base pay.” Base pay is the pay rate without benefits, commissions, bonuses or raises. If your organization can’t compete on base pay, you may be able to make your open roles more attractive with robust benefits packages, vacation time or flexible work hours.

Pay is the Top Priority for Job-Seekers

According to a survey by CareerBuilder, 54% of workers say salary is the deciding factor when it comes to applying for a job. The survey also found that salary is the most common deal-breaker. 48% of respondents said they would stop pursuing a job if they found out the starting salary was lower than the rate on the job posting. Glassdoor reports 67% of job-seekers say pay is the top motivator to change jobs.

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Should Employers Include Pay Range on Their Job Postings?

Being transparent with pay has notable benefits and drawbacks. SHRM reports roughly 12% of job postings across all industries include salary information, which is up 8% from 2019. Transparent job posts ensure neither job-seekers or employers are wasting their time on a job post. According to a LinkedIn Jobs study, more than 70% of professionals want to hear about salary in the first message from a recruiter. Job postings with specific salary information get more applicants, according to the SHRM study.

bar graph describing what job seekers want in job postings

States that Require Salary Disclosures on Job Posts

Transparency in pay is a growing priority at the state and federal level. The federal government protects discussing salary through the National Labor Relations Act. Some states have adopted laws requiring salary disclosures on job posts. These state laws are dynamic, and affect employers in California, Washington, Maryland, Rhode Island, Nevada, Connecticut and Colorado. 

California, Washington, Maryland and Rhode Island

Employers in California are required to disclose the pay range for the role if an interview is requested. In a similar vein, Washington State, Maryland and Rhode Island make employers disclose pay ranges when an applicant requests them. Additionally, Washington State requires employers to disclose salary ranges to employees that are changing roles, if the information is requested. Employers in Rhode Island must provide employees with pay range disclosures when they’re hired, changing roles or upon request.

Nevada and Connecticut

Nevada requires employers to provide the pay range to applicants after an interview, whether they requested it or not. Connecticut requires employers to provide the salary range to applicants when requested and when the job is offered. The state also requires pay disclosures to employees when they’re hired or changing roles.


Colorado has some of the strictest salary disclosure laws. In this state, employers with a single employee are required to disclose the wage rate for the job, a description of other forms of compensation available for the role, and the benefits for the role in the job posting.

Competitive Benefit Packages

Though benefits don’t usually include hard compensation numbers, benefits are extremely valuable to job-seekers and employees. Sometimes, the benefits package is the deciding factor (or deal-breaker) for job-seekers. Like pay, employers should make sure their benefits packages are competitive to attract the right talent.


Most job-seekers are looking for health insurance and options for vision and dental insurance. Healthcare insurance is the most sought-after part of an organization’s benefits package, according to the 2019 Wellness & Wealth Report by Lively. Organizations should be aware of the healthcare benefits required by the Affordable Care Act and cater their benefits packages accordingly.

Health insurance coverage is attractive to job-seekers, and it drives satisfaction for current employees. Data from AHIP’s The Value of Employee-Provided Coverage shows comprehensive coverage is the most popular aspect of their current coverage, at 39%.

With healthcare coverage, organizations have the option to cover 100% of the premium or a set percentage, where the employee pays the remainder. Organizations can also opt to cover the employee alone, or to cover the employee and their family members.

Other types of insurance job-seekers might want include: 

  • Short- and long-term disability insurance
  • Vision insurance
  • Dental insurance
  • Life insurance 

Vacation Time:

According to the Bureau of Labor Statistics, workers with a year of experience get 11 days of paid vacation per year. In addition to those days, the Federal Government provides 10 paid holidays each year. Vacation time is an important part of attracting job-seekers, but not every industry can be generous with time off. Manufacturing jobs, for example, often have dynamic production demands, and giving away excess time off may result in rippling problems. Make sure your vacation time and PTO policy is attractive, but realistic for the work demands of your organization.

Federal, state and local laws vary by location, and HR professionals should be aware of the laws regarding vacation and paid time off.

Retirement Savings:

401(k) retirement savings plans are among the most popular benefits in today’s workplace. In competitive industries like tech, law, engineering and digital marketing, employers are likely to offer matching (usually around 3%, but some organizations offer more). 401(k) plans provide a simple, cost-effective route to retirement with tax-deferred contributions. Like employees, employers can benefit from 401(k)s. Organizations can deduct contributions to their employees’ 401(k) accounts. The tax benefits of 401(k)s could make an attractive benefit package more attainable for employers, even at smaller organizations.

What’s Important to Your Job-Seekers?

Though the Bureau of Labor Statistics offers data on competitive pay by industry, knowing your specific job-seekers is crucial. Attract the right talent with the right mix of competitive pay, benefits and other non-monetary benefits like company culture and flexible schedules. If you need help finding the right talent for your organization, we’re here to help. Find one our branches today to get started.

Categories: HR and Management Advice, Innovation & Change Management


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