Government overreach hides behind ‘pay transparency’ bill

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By Keli‘i Akina

Every year we see a handful of bills at the Legislature that put good intentions ahead of practical experience. 

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Even when the people who would be most affected by the proposals explain that they are unworkable or counterproductive, those good intentions still keep the bills moving forward. 

Happily, many of these bills are usually dropped or fixed during the last weeks of the legislative session. 

Keli‘i Akina

But sometimes, there is so much ideological support for a proposal that the dissenting voices don’t get the attention they deserve.

Such is the case with SB1057, a bill that would require all job listings to include the hourly rate or salary range so as to promote “transparency and equal pay for all employees.” 

The sponsors claim that “initial experiences” with such a law in California, Colorado and New York City have “benefited employers, current employees and prospective employees.”

But that is hardly sufficient evidence or justification for the state to further meddle in the affairs of private businesses. Hawaii is already considered one of the least business-friendly states in the nation, and this would only make it worse. 

Groups such as the Chamber of Commerce Hawaii, the Retail Merchants of Hawaii, the National Federation of Independent Businesses and the Society for Human Resource Management have all made it clear that the wage-disclosure requirement could lead to major problems for both employers and employees.

Pay, after all, is only part of the picture when you’re looking for a job, and the pay disclosure requirement could hurt job seekers more than it helps them by taking away their ability to negotiate their own compensations.

For example, some people are willing to take a lower salary in exchange for a better benefits package, a more flexible schedule, more vacation time or a company vehicle. Others might be happy to trade away benefits or take on more responsibilities in exchange for higher base pay. 

This is as it should be. No one else knows what compensation package is best for you better than you do. 

Other considerations weighing against this bill are that it would:

>> Be an administrative headache for small businesses, where job titles and roles can be imprecise and evolve according to the business’ needs.

>> Hinder the ability of employers to offer higher or lower salaries than those of existing employees in response to the economy, issues within the business or other concerns.

>> Give a competitive advantage to large mainland corporations over small local businesses because they could offer higher pay rates.

>> Fuel personnel difficulties if all the employees know each other’s salaries. 

Finally, it would effectively ban a valuable way for employers to find new talent — and for less qualified workers to get their foot in the door. That’s because employers would not be able to offer a lower salary to someone who doesn’t meet all the qualifications but shows potential for growth.

Yes, this bill has good intentions. Yes, it sounds like it’s about fairness. But all that doesn’t necessarily matter when it comes to the real world.

The only thing that matters is that SB1057 would hurt the people it is aiming to help by hamstringing those who are best able to help them — their potential employers.
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Keli‘i Akina is president and CEO of the Grassroot Institute of Hawaii.

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Grassroot Institute of Hawaii is a nonprofit, nonpartisan research institute dedicated to the principles of individual liberty, the free market and accountable government. Through research papers, policy briefings, commentaries and conferences, the Institute seeks to educate and inform Hawaii's policy makers, news media and general public. Committed to its independence, the Grassroot Institute of Hawaii neither seeks nor accepts government funding. The institute is a 501(c)(3) organization supported by all those who share a concern for Hawaii's future and an appreciation of the role of sound ideas and more informed choices.

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