The New York City Council recently passed a law requiring employers to be more transparent about company wages, in a bid to reduce inequities for women and minority employees seeking positions.

The law, passed on January 15^th, will be going into effect this May, requiring job postings to disclose their minimum and maximum salary, according to the City Council. Proponents say the law will reduce inequities and close the wage gap, while others fear the law will make doing business in New York City in the age of COVID all the more complicated.

Like most political issues today, New York City’s wage transparency law is polarizing, pitting some business groups and their sympathizers, against activists over the bill.

Impediment to Contract Negotiations

Kathryn Wylde, chief executive of Partnership for New York City, a nonprofit organization of select corporate CEOs in New York, views the City Council’s plans as the incorrect approach, despite being in favor of greater pay transparency. “It’s just the wrong solution. It should have never been allowed to go through”, Wylde told The Business Insider. Republican City Council member Joe Borrelli criticized the bill as “smacking as something someone who has never run a business would support,” adding that the bill is “an unnecessary interference in contract negotiation.”  

On the other hand, proponents, like Ian Carleton Schaefer, chairman of New York Employment & Labor at Loeb & Loeb LLP, tells The Wall Street Journal that the new law “is a big deal. Companies are going to have to very quickly get very comfortable with how they’ve been making pay determinations along equity lines.”

Other advocates, like Beverly Neufeld, president of PowHer, a “network of over one hundred organizations committed to advancing economic equality for New York women,” tells Marketplace that “It took quite a long time to … raise awareness around the wage gap, around wage discrimination. [The law] is going to help all workers, but it’s also going to help all businesses, especially people who have been disadvantaged by the system. And that, typically, is women and people of color, who have been subjected to conscious and unconscious biases in wage setting.”

Neufeld elaborated, saying that the law “It reflects on [New York City council members’] desire to be transparent and fair, and it shows respect for workers. And I think we find that companies do better when they follow these best practices.”

Neufeld may be right, as a 2015 study published in Industrial Relations found diminished gender pay gaps at companies that have banned pay secrecy. The report found that “women were more likely to both work under a pay secrecy policy and to violate a formal pay secrecy policy,” likely due to “loopholes and weak enforcement of the National Labor Relations Act, which protects workers’ rights to discuss their pay,” per The Lily.

‘Take This Job and Shove it’

Professor Teresa Ghilarducci, who teaches economics at New York’s New School of Social Research, sees New York City’s new law as an addition to a wider phenomenon, telling NPR, “We're seeing a period of what people have called in the press ‘The Great Resignation.’ I think it's the ‘take-you-job-and-shove-it’ movement, where people are finally seeing that they don't have to put up with not so much the pay, but the working conditions. That has alarmed employers. And the city council is responding to that and will actually help out employers,” by helping them hold on to their employers through fairer pay and treatment.

Ghilarducci additionally sees the wage transparency law as helping workers in the long run, saying, “What the research shows and every labor economist knows and teaches, is that if salaries are kept secret, the employer pays less than they otherwise would. They gain more profits than they otherwise would. Job mobility is hindered. And the most desperate workers, the ones who have less mobility, less bargaining power, [are] hurt the most.”