(IntegrityPress.org) – President Biden’s administration is simultaneously pushing for salary transparency over “racial equity” concerns while punishing employers that have compared salary data to keep wages low. A new proposal from the White House wants to reveal all salary information associated with any contractor or subcontractor who takes taxpayer money. Critics argue it would depress wages across the board.
The rule change is theoretically even more broad, including all employees or independent contractors who perform any work associated with federal contracts.
The new rule would impact nearly 90,000 federal contractors (businesses, not individual people) that annually do $694 billion worth of work for the federal government. Major companies like Lockheed Martin, Raytheon, Pfizer, and Bloomberg would be impacted.
Biden has made the issue a recurrent theme during his presidency, stating that the policy proposal was necessary to make wages between men and women or different minority groups more “equitable.” Proponents claim that bias and discrimination is more common in jobs when the salaries aren’t made public.
Twenty-two different states or cities have already implemented a version of the policy in their local jurisdictions, including New York City. A Washington, D.C. law goes into effect this April which would bring the change to the capital.
Researchers are pointing out that the plan actually depresses wages for everyone involved and cite multiple studies to back up their claims. The National Bureau of Economic Research found a reduction of 2% in sectors where transparency laws have been enacted. This is juxtaposed with a general trend of increasing wages nearly 20% in the aftermath of the pandemic, suggesting the policy itself is a major contributing factor.
The law allows other firms in similar industries to use the data to set salaries at their lowest possible point. It thus decreases the bargaining power of the individual who can simply be told “look, if we raise your wage we have to raise it for everyone or we’ll be perceived as unfair.”
The trend was also cited by researchers who looked at California which enacted a similar version of the law in 2010. City managers saw their salaries decrease 7%.
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