In New York City, as part of an effort by the city council to “narrow the gender pay gap,” a new bill proposes to forbid employers from asking potential hires about their salary history. According to a report from the office of Public Advocate Letitia James, the bill’s prime sponsor, “the common practice of employers’ use of prior salary history to determine employee pay perpetuates the existing wage inequities women face.” According to this argument, salary-history inquiries trap women, who are already victims of discriminatory pay practices, in a vicious cycle of systemic wage theft. New York City joins Massachusetts and Philadelphia as the first jurisdictions to enact laws against this practice; there are plans to introduce similar legislation at the federal level.
Leaving aside the question of whether a significant wage gap actually exists between men and women with identical education, training, and experience, the bill (which Mayor Bill de Blasio plans to sign) represents a massive failure to understand labor markets and seeks to impose on private industry the kind of wage transparency commonly associated with public employment. The advocates behind the law want to eliminate the question of individual merit or talent from hiring across the economy, replacing it with salaries inflexibly linked to job title.
At a press conference prior to the city council’s vote, Public Advocate James made a statement that contradicts the meaning of the bill as written:
This bill focuses primarily on transparency. If I am interviewing for a position with your company, and I have been out of the workforce for ten years because I chose to have a baby, or care for my elderly parents, or care for my sick children, or just care for society, as women tend to do, and you ask me what my previous salary history is . . . then I am negotiating against myself, because I am starting from a disadvantage, and by doing that I am perpetuating discrimination which will carry through the years until I retire. All that I am asking is, if you want to know the worth of that job, post it. Post it clearly. The salary of that position should be posted, it should be transparent, and so anyone who seeks to apply for that job will know that job is worth $35,000.
But the bill (which passed by a margin of 47 to 3) says nothing about wage transparency or posting salary data with hiring notices. It would prohibit asking about salary history or using an applicant’s past compensation as a basis for contract negotiation. James, an attorney and former prosecutor, must understand the limits of her own proposal, but her explanation of it is skewed, and points to the actual intent of the law—to make private-sector salaries strictly a function of job title, as in the civil service.
Council member Elizabeth Crowley, a prime cosponsor of the bill, makes this point clearly. “There is a position that has certain tasks, and there should be a salary for that position.” This vision of the labor market assumes that salary negotiation is a one-way street in which employers exercise monopsony power and dictate how much they will pay their employees. It also imagines an economy in which people are identical cogs on a wheel.
In the real world, the same job title can cover a broad range of tasks and responsibilities, and people with widely varying levels of experience may all work under the label “analyst,” or “associate,” or “engineer,” and receive vastly different salaries based on their actual—as opposed to bureaucratically imputed—value to the organization. Further, potential employees are not prison labor, obligated to work for whatever salary they’re offered. Salary negotiation is driven not only by the employer’s budget but also by the applicant’s knowledge of his or her market value, which is by no means a theoretical or purely subjective measure. Talented, experienced workers in a tight labor market naturally demand higher wages.
City council speaker Melissa Mark-Viverito, another key supporter of the bill, contributed her own refracted conception of labor markets, noting that “if a woman makes a decision to be out of the workforce in order to raise a family, I think that’s actually commendable, and that’s something that should be factored in in a different way.” She did not explain what form that “different way” would take, but it seems likely that it would involve employers compensating workers for non-work experience.
Ironically, forcing employers to post salaries would help keep mothers out of the workforce. A woman returning to work after a few years raising her children should expect to take a lower salary than someone who had been on the job all that time; it is precisely her willingness to work for less that would be her selling point to an employer. If employers are forced to offer any applicant the same salary for a given position, they will likely hire the most experienced candidate. Offering to work for less money is how less experienced people of either gender gain a foothold in a competitive job market.
Neither James nor Mark-Viverito appears to have any private-sector work experience, which may have warped their understanding of how the job market operates. James was a public defender and prosecutor before entering the city council, while Mark-Viverito was a union staffer. Crowley worked as an art restorer as a member of the painters’ union, which follows strictly delineated rules about the hiring, roles, and salaries of apprentices and journeymen.
These elected officials, lacking any real knowledge of the dynamics of hiring, and who have possibly never actually negotiated with an employer over their own salary, are attempting to impose their blinkered economic vision on the most robust labor market in the United States. The market is flexible enough to work around all kinds of efforts to constrain it—but here comes another one.
Photo by Scott Olson/Getty Images