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Level the Playing Field

In 2016, New York and Massachusetts enacted laws banning employers operating within their states from compelling job seekers to disclose their salary history. Since then, dozens of cities and states have enacted similar legislation. Now, corporations such as Amazon, Bank of America and Wells Fargo, to name a few, are following those laws to the letter across their organizations, regardless of jurisdiction, and forbidding their HR teams and outside recruiters from requesting compensation history.

Proponents of the legislation say that withholding information on past or current wages forces employers to judge the value of the job rather than the individual applicants. This makes sense, on one level. On the other hand, it undermines the ability to respond to market changes based on employment trends—a competitive hiring environment would cause companies to increase their offers, whereas overall compensation levels would decline in a deteriorating market.

One must, however, examine the genesis of these regulations, which were initially put forth as an attempt to cure the imbalance in pay between men and women in the workplace. This is, indeed, a real problem—the body of research on the topic indicates material differences in compensation between men and women across all levels.

I actually prefer another approach to addressing this issue. The US Court of Appeals recently determined that businesses may be held liable for discrepancies in their workers’ pay, even if the imbalance stems from previous employers. This would force companies to ensure that there is pay equity among their ranks. It also makes a lot more sense, as it would preserve the free market system while leveling the playing field.

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