4 ms·

I get why employers would hate this, but overall, wouldn't greater transparency in the labor market drive economic growth by virtue of making the labor market m

I get why employers would hate this, but overall, wouldn't greater transparency in the labor market drive economic growth by virtue of making the labor market more efficient by doing a better job of connecting skilled, hard-working and motivated employees with employers who can pay more?

gsk22 4y ago
I suspect employers are more interested in attracting talent by _appearing_ to pay highly than by actually doing so.
robertlagrant 4y ago
I don't think they'll hate it. If they know what a prospective employee is making, they can offer a minimal increment on that within their (wide) salary range. Currently, only the employer knows their real budget (and that may change if they get the right candidate) and only the employee knows what they'll move for. Salary negotiation is based on those two secrets. This legislation makes the latter secret public knowledge.
- m-ee 4y ago
  The latter was already public knowledge, your entire salary history is probably available via The Work Number. This makes the former secret public knowledge.
  - robertlagrant 4y ago
    Blimey, if your current salary is available at salary negotiation time then that's a much bigger problem then advertising salaries. To your point: companies can advertise a big range, or create a new job title, for a job, or level you based on undecided job levels according to what they want to pay you. I don't think this legislation adds anything.
- ThunderSizzle 4y ago
  > only the employee knows what they'll move for ... This legislation makes [that] secret public knowledge. Not everyone's motives is the same on this, so it's still secret. Some people will require more than a small bump to move into the risk of an unknown new employer. Also, some people value flexibility (or rigidity), autonomy, etc. more than money - to the point where some people will pass substantial amounts of money if it means sacrificing real time with the fam.
  - robertlagrant 4y ago
    I totally agree, but the new employer doesn't have to know any of that.
jstx1 4y ago
By what mechanism does legally enforced transparency make the labor market more efficient?
- loeg 4y ago
  In general, pricing transparency increases market efficiency (and vice versa).
- woodruffw 4y ago
  Pricing transparency eliminates economic triage and uncertainly: if you want to make $XXX, you don't have to apply to 10 different jobs and spend everyone's time determining whether they'll pay you $XXX.
  - sokoloff 4y ago
    You still don't know if they'll pay you $XXX. You only know that they claim that there exists some hypothetical employee to whom they'd in good faith imagine paying $XXX.
    - joshuamorton 4y ago
      Ranges have lower bounds. There is some subset of people for which this reduces the uncertainty to zero.
- lotsofpulp 4y ago
  By the same mechanism that makes it work for commodities and public equity markets.
  - sokoloff 4y ago
    Um, that mechanism is the printing of the actual trades and an open-outcry (now electronic) market-making process for definitionally fungible assets.
- joshuamorton 4y ago
woodruffw 4y ago
Most won't directly voice this, but I believe the primary objection from many employers is that there kinds of salary transparency laws raise the floor, since you know (roughly) what all of your colleagues are making. In other words: software (like most other industries) relies in part on employees low-balling themselves (and stigma around sharing salary information), which is harder to do when you know what the actual salary band is.
- boole1854 4y ago
  In my opinion -- and I have no hard data to back this up, merely some limited personal experience -- the biggest issue employers will have about salary transparency is that it makes paying high performers high salaries more difficult. Typically having a high performer on staff is a huge win for the employer. E.g., at one previous company, the top couple sales people were 10X performers compared to the median sales person. And they were compensated maybe 5X the median. A disgruntled employee found and leaked a document that listed everyone's compensation -- and the negative feelings that were generated towards the company and towards the highly paid sales people was profound. Part of the issue is that the 10X sales people did not necessarily work 10X harder, they just had the right set of personality traits, industry experience, and je ne sais quoi that made them able to bring in more and bigger clients. But many people feel intrinsically that compensation should be tied to effort and to those people it was upsetting to see coworkers who did not necessarily put in 5X more effort get 5X more money. Edited to add: to be clear, I do not personally have a problem with pay being tied to results instead of to effort, but I saw first hand that many people have a different opinion about this.
  - badpun 4y ago
    It can be dealt by creating high-paying higher rungs on career ladder and then promoting the 10x people there. So, regular SE position can have a salary range of say $120k-$150k, but principal senior staff ninja can have say $400k-$600k. That's how FAANGs do it basically.
    - boole1854 4y ago
mathattack 4y ago
Companies get a huge financial lift by underpaying some percentage of their employee base. Consider any company whose main cost is people, and revenue is roughly proportional to headcount. (Consultancy, school, security, etc) Let’s say they can utilize an information asymmetry to underpay half their workforce by 10%. That cuts their cost by 5%, and it’s all to the bottom line. If they were a 10% net margin business, now they’re 15%. This is why they fight transparency. It’s a form of price discrimination. A libertarian might say “It’s a free market, and everyone enters the contract willingly.” I am sympathetic to that, though markets tend to work most efficiently when there is more information. The one downside is some remote jobs might not be available in New York any more. NYC wage levels make remote work more difficult from a cost arbitrage anyway.
wnevets 4y ago
No, you have gotten it all backwards. You are only allowed to use the more efficient market rationale when are you defending low wages and higher prices for regular people. Regular people getting higher wages is seen as a disease that must be stopped at all cost. [1] [1] https://www.bloomberg.com/news/articles/2022-03-17/powell-treads-tricky-path-in-saying-wages-are-rising-too-fast https://www.bloomberg.com/news/articles/2022-03-17/powell-tr...
- fundad 4y ago
  checkmate
- gruez 4y ago
  It makes sense though. Wages going up could easily lead to a wage-price spiral.
ramraj07 4y ago
An example is when companies have to increase their offers due to changing market conditions; currently they can just silently do that without telling existing employees. But with the new law existing employees have a way of finding it out so they will then go ask for a raise to match this range. Of course employeees are free to discuss salaries themselves but in America that’s still not normal and common.
- pixl97 4y ago
  Of course this is why current employees seem to leave all the time for other opportunities rather than getting raises and keeping knowledge inside the company. HR: "Why do we have retention problems" Also HR: "Pay the new people 1.5x, but don't tell anyone"
patrickthebold 4y ago
Exactly, I'm a bit surprised that this needs to be legislated. Many people will not apply/respond to recruiters if the salary isn't posted. I'd think employers would be doing this simply because it makes things easier for them.
heavyset_go 4y ago
Companies profit from information asymmetry. Efficiency comes from reducing that asymmetry, but efficiency also means less ability to profit.

gsk22 4y ago

I suspect employers are more interested in attracting talent by _appearing_ to pay highly than by actually doing so.

robertlagrant 4y ago

I don't think they'll hate it. If they know what a prospective employee is making, they can offer a minimal increment on that within their (wide) salary range. Currently, only the employer knows their real budget (and that may change if they get the right candidate) and only the employee knows what they'll move for. Salary negotiation is based on those two secrets. This legislation makes the latter secret public knowledge.

m-ee 4y ago
The latter was already public knowledge, your entire salary history is probably available via The Work Number. This makes the former secret public knowledge.
- robertlagrant 4y ago
  Blimey, if your current salary is available at salary negotiation time then that's a much bigger problem then advertising salaries. To your point: companies can advertise a big range, or create a new job title, for a job, or level you based on undecided job levels according to what they want to pay you. I don't think this legislation adds anything.
ThunderSizzle 4y ago
> only the employee knows what they'll move for ... This legislation makes [that] secret public knowledge. Not everyone's motives is the same on this, so it's still secret. Some people will require more than a small bump to move into the risk of an unknown new employer. Also, some people value flexibility (or rigidity), autonomy, etc. more than money - to the point where some people will pass substantial amounts of money if it means sacrificing real time with the fam.
- robertlagrant 4y ago
  I totally agree, but the new employer doesn't have to know any of that.

jstx1 4y ago

By what mechanism does legally enforced transparency make the labor market more efficient?

loeg 4y ago
In general, pricing transparency increases market efficiency (and vice versa).
woodruffw 4y ago
Pricing transparency eliminates economic triage and uncertainly: if you want to make $XXX, you don't have to apply to 10 different jobs and spend everyone's time determining whether they'll pay you $XXX.
- sokoloff 4y ago
  You still don't know if they'll pay you $XXX. You only know that they claim that there exists some hypothetical employee to whom they'd in good faith imagine paying $XXX.
  - joshuamorton 4y ago
    Ranges have lower bounds. There is some subset of people for which this reduces the uncertainty to zero.
lotsofpulp 4y ago
By the same mechanism that makes it work for commodities and public equity markets.
- sokoloff 4y ago
  Um, that mechanism is the printing of the actual trades and an open-outcry (now electronic) market-making process for definitionally fungible assets.
joshuamorton 4y ago

woodruffw 4y ago

Most won't directly voice this, but I believe the primary objection from many employers is that there kinds of salary transparency laws raise the floor, since you know (roughly) what all of your colleagues are making. In other words: software (like most other industries) relies in part on employees low-balling themselves (and stigma around sharing salary information), which is harder to do when you know what the actual salary band is.

boole1854 4y ago
In my opinion -- and I have no hard data to back this up, merely some limited personal experience -- the biggest issue employers will have about salary transparency is that it makes paying high performers high salaries more difficult. Typically having a high performer on staff is a huge win for the employer. E.g., at one previous company, the top couple sales people were 10X performers compared to the median sales person. And they were compensated maybe 5X the median. A disgruntled employee found and leaked a document that listed everyone's compensation -- and the negative feelings that were generated towards the company and towards the highly paid sales people was profound. Part of the issue is that the 10X sales people did not necessarily work 10X harder, they just had the right set of personality traits, industry experience, and je ne sais quoi that made them able to bring in more and bigger clients. But many people feel intrinsically that compensation should be tied to effort and to those people it was upsetting to see coworkers who did not necessarily put in 5X more effort get 5X more money. Edited to add: to be clear, I do not personally have a problem with pay being tied to results instead of to effort, but I saw first hand that many people have a different opinion about this.
- badpun 4y ago
  It can be dealt by creating high-paying higher rungs on career ladder and then promoting the 10x people there. So, regular SE position can have a salary range of say $120k-$150k, but principal senior staff ninja can have say $400k-$600k. That's how FAANGs do it basically.
  - boole1854 4y ago

mathattack 4y ago

Companies get a huge financial lift by underpaying some percentage of their employee base. Consider any company whose main cost is people, and revenue is roughly proportional to headcount. (Consultancy, school, security, etc) Let’s say they can utilize an information asymmetry to underpay half their workforce by 10%. That cuts their cost by 5%, and it’s all to the bottom line. If they were a 10% net margin business, now they’re 15%. This is why they fight transparency. It’s a form of price discrimination. A libertarian might say “It’s a free market, and everyone enters the contract willingly.” I am sympathetic to that, though markets tend to work most efficiently when there is more information. The one downside is some remote jobs might not be available in New York any more. NYC wage levels make remote work more difficult from a cost arbitrage anyway.

wnevets 4y ago

No, you have gotten it all backwards. You are only allowed to use the more efficient market rationale when are you defending low wages and higher prices for regular people. Regular people getting higher wages is seen as a disease that must be stopped at all cost. [1] [1] https://www.bloomberg.com/news/articles/2022-03-17/powell-treads-tricky-path-in-saying-wages-are-rising-too-fast https://www.bloomberg.com/news/articles/2022-03-17/powell-tr...

fundad 4y ago
checkmate
gruez 4y ago
It makes sense though. Wages going up could easily lead to a wage-price spiral.

ramraj07 4y ago

An example is when companies have to increase their offers due to changing market conditions; currently they can just silently do that without telling existing employees. But with the new law existing employees have a way of finding it out so they will then go ask for a raise to match this range. Of course employeees are free to discuss salaries themselves but in America that’s still not normal and common.

pixl97 4y ago
Of course this is why current employees seem to leave all the time for other opportunities rather than getting raises and keeping knowledge inside the company. HR: "Why do we have retention problems" Also HR: "Pay the new people 1.5x, but don't tell anyone"

patrickthebold 4y ago

Exactly, I'm a bit surprised that this needs to be legislated. Many people will not apply/respond to recruiters if the salary isn't posted. I'd think employers would be doing this simply because it makes things easier for them.

heavyset_go 4y ago

Companies profit from information asymmetry. Efficiency comes from reducing that asymmetry, but efficiency also means less ability to profit.