The Problem
Lack of competition in the labor market is gaining attention as a source of wage stagnation in the United States. One component of this challenge is asymmetric information on wages, whereby employers have superior knowledge of the distribution of wages relative to workers. This asymmetry of information is potentially suppressing wage growth as it limits workers’ ability and inclination to negotiate for higher pay.
The Proposal
This paper advances a five-part proposal to improve wage transparency as a strategy for improving worker bargaining power, and ultimately, raising wages across the income distribution. The first two pillars of the proposal aim to ensure wage information is available to all workers. The third and fourth pillars of the proposal are designed to provide workers the same wage information afforded to employers. Finally, the fifth pillar calls for Congress to appropriate small amounts of funds to evaluate the impact of policy efforts to promote wage transparency.
Abstract
Lack of competition in the labor market is gaining attention as a source of wage stagnation in the United States. One component of this challenge is asymmetric information on wages, whereby employers have superior knowledge of the distribution of wages relative to workers. This asymmetry of information is potentially suppressing wage growth as it limits workers’ ability and inclination to negotiate for higher pay. This paper advances a five-part proposal to improve wage transparency as a strategy for improving worker bargaining power, and ultimately, raising wages across the income distribution.
