Analysis: Those voting ‘yes’ believe there are a significant number of Vermont workers who are locked in to a lower wage due to gender or race discrimination. This bill would give these low wage workers the ability to prevent their salary history from being a burden on future salary negotiations.
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Others believe that this bill will make it more difficult for Vermont employers to hire good employees. Vermont would join New York, New Jersey, Massachusetts and Delaware as the fifth
state on the East Coast to ban employers from asking about salary history. This would place Vermont employers at a competitive disadvantage to surrounding states like Connecticut, New Hampshire, Maine and Rhode Island.
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Vermont employers’ expenses will rise as they allocate resources away from meeting customer demands and into researching employee past compensation. If expenses rise, employers will be unable to raise employee wages as quickly. An applicant’s salary history allows employers to have a benchmark for starting wages. In a lightly regulated labor market, discrimination is discouraged because applicants are free to find employers that do not use discrimination to induce lower salaries. Without applicant disclosed salary histories, employers can choose to make shot-in-the-dark compensation decisions without knowledge of salary histories, or they can spend time and money to investigate an applicant’s skill-set and corresponding compensation. Both options mean higher expenses to employers and employees that other states do not have to pay.
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Thankfully, this business expense blow will be softened due to increasingly more accurate salary information based on job description that is available for minimal cost
online. While this information is not as accurate as personal salary histories, Vermont companies may find these online estimates to be a useful substitute. The market provides, even in the face of government hostility.
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The applicant knowledge problem would be further decreased because there is nothing illegal about voluntary divulging salary history. The most highly compensated applicants have the incentive to volunteer this information in a job interview. The least compensated applicants can choose to hide their salary history, but to do so would make employers suspect that they are indeed lower wage applicants, and offer them lower salaries. Lower income applicants are unlikely to be offered significantly higher salaries at their new jobs, despite the best intentions of the legislators who voted for the bill.
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As Recorded in the House Journal, Friday, March 21, 2018: “Shall the bill be amended as recommended by the Committee on General,Housing, and Military Affairs? was decided in the affirmative. Yeas, 137. Nays, 0..” (
Read the Journal, p.361-362.)
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