Following Massachusetts, in an effort to curb gender wage disparity, NYC similarly approved of the decision to ban employers’ rights to ask about candidates’ past pay history. The theory is that since companies won’t know previous salaries, female candidates’ pay can now be rectified to be equal to those of their male colleagues.
As a headhunter servicing the NYC market (among many), here is how the new salary gag laws will impact job seekers and employers:
#1. Employment lawyers, training companies, and government bureaucrats will win. Agents posing as candidates will successfully ensnare many a non-suspecting HR representative or some poor new headhunter, just trying to fill out a candidate details form. $250k fines per offense will flow to government coffers, hence the interest to approve this type of legislation in the first place. Training companies will be hired to ensure that companies’ employees are trained to ask the right questions, increasing costs of doing business in NYC.
#2. Unscrupulous candidates will win, while humble candidates continue to suffer.Every interviewer has our fair share of horror stories of bad candidates and hires. Many know exactly what to say and how to behave during the interview process. Now, with this added layer of decreased transparency, candidates can now maneuver their way into higher salary bands with more ease and less justification than ever before. Evidence for why you’re worth an inflated price? Now, we’re not even allowed ask!
Nice candidates who are just trying to do the right thing will be more intimidated because there are less guideposts than before and they’ll need to re-learn how to handle even more uncertainty. Without any salary conversations on the table, good candidates can be low-balled and strong-armed even more successfully.
Fact is: if you don’t know how to negotiate well, you’ll never win in these salary discussions!
#3. Lack of trust will brew between employers and candidates due to negative experiences. Unscrupulous candidates will record calls to try to catch employers in a mistake to spark litigation. In turn, employers will start regarding every candidate with suspicion to protect against threat. Doubt will pervade every interaction, leading to a growing culture of animosity between interviewers and candidates.
#4. Startups will suffer more than larger corporations. $250k fines per occurrence will more negatively affect smaller organizations who can’t afford any of these fines. Larger firms will have an unfair advantage to be able to get away with playing the game like before, while small companies have to dot every i and cross every t.
This will uneven the playing field for smaller players looking to hire, who most likely will have to pay higher rates due to lack of strong-arm capability to apply pressure. It only takes a few startups to be wiped out before word travels to dissuade new startups from planting roots in certain geographic locations.
This will negatively affect the startup scene growth within cities and states who are ironically trying to attract startups.
#5. The gender pay gap will be net unchanged minus a few stories of personal triumphs and empowerment. The reason is that gender inequity is a social issue pervasive in every aspect of our lives and social construct that goes so much deeper than the dollars and cents. The same insecurities, abuse of power, imposter syndrome, mental roadblocks, maternity leave problems, imbalance of home duties, and negotiation issues will continue remain unchanged by this law.
Men will still want to be paid higher than women. The internet will continue to expose numbers, salaries, and expectations to continue changing the “asking price” that male candidates feel they’re worth.
In other words, men will continue to argue for higher than asking price to join a new firm, while women will be using the asking price as the market rate cap.
Businesses will lose because wage inflation will grow at a higher pace due to these types of laws! All candidates will be emboldened to throw valuation out the window to pressure businesses to pay more than necessary. In this new world, emotions will now dominate the conversation, rather than the actual evidence based on value and relativity between candidates of certain caliber.
Like many government initiatives, laws are enacted for political reasons, largely based on theory with no true long-term solution in mind. This type of short-sighted legislation is exactly why doing business in US cities has started to lose its luster compared to other more business-friendly countries and cities abroad.
If the entire US continues to be so blind to what businesses and society actually need as true solutions, everyone in the US will lose.
If this trend continues, everyone will be penalized since we’ll be living in an increasingly uncomfortable, mistrusting, and an over-inflated world where everyone is going to constantly feel undervalued and never quite happy with their worth.
Dandan Zhu is a headhunter, career coach, and global influencer on all things life and career success. Follow Dandan’s insights here.