Article:Massachusetts Just Banned Companies From Asking Job Applicants How Much They MakeApril 24th, 2017 | Articles, Food for Thought | No Comments »
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Massachusetts Just Banned Companies From Asking Job Applicants How Much They Make
When it comes to negotiating salaries, employers tend to have some built-in advantages over workers—namely, they know more. Companies spend lots of money on consultants who can tell them the market rate for, say, an accountant or database manager. They can ask job applicants about their previous salaries. They often discourage staff from discussing their pay among themselves, even when doing so might violate the law, making it tough for Cathy in marketing to figure out whether the guy two cubicles down really makes more than her.
You and me? We can go on sites like PayScale or Glassdoor to try and figure out our worth. We can talk with friends in the industry. But, when it comes time to haggle, the end result is almost always a case of asymmetric information.
This week, Massachusetts enacted a new law that could even the playing field a bit, by barring employers from asking job applicants about their salary history. Prospective hires can still choose to tell companies how much they earn. But no longer will residents of the Bay State be forced to fudge their pay by a few grand every time they fill out a job form; they can just leave the HR department in the dark and force corporate to make a decent offer.
Massachusetts is the first state to pass such a rule. Primarily, the statute is designed to help close the wage gap between men and women, the logic being that if women fall behind on salary early in their career, whether because of discrimination or motherhood or shyness about asking for a raise, the new law will keep it from penalizing them when they move on to a new job. That said, the rule could help anybody who started off their working life on a slightly weak foot, and might cut down on the role of luck a bit in what both men and women make over time. People who graduate into a recession, for instance, tend to earn lower salaries for years after the economy has recovered, mostly because they picked the wrong moment to go out for their first job; the Massachusetts law might make it easier to make up for that kind of early disadvantage.