Wednesday, August 17, 2016

Salary negotiation: some Massachusetts market design

The NY Times has the story: Massachusetts Bans Employers From Asking Applicants About Previous Pay

"In a groundbreaking effort to close the wage gap between men and women, Massachusetts has become the first state to bar employers from asking about applicants’ salaries before making them job offers.

"The new law will require hiring managers to offer a compensation figure upfront — based on what the applicant’s worth is to the company, rather than on what he or she made at a previous position.
"No longer will job seekers be compelled to disclose their salary or wages at their current or previous jobs — which often leaves applicants with the nagging suspicion that they might have been offered more money if the earlier figure had been higher. Job candidates will still be allowed to volunteer their salary information.

"The Massachusetts law, which will take effect in July 2018, takes aim at the subtle factors that often play into compensation decisions. Companies will not be allowed to prohibit their workers from telling others how much they are paid, a move that advocates say can increase salary transparency and help employees uncover disparities."

It will be interesting to see how this plays out. The intention is to free people from being forever constrained by their salary history. Employers will be worried about the winner's curse...

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