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Should Indiana join other states in requiring pay transparency in job postings?
Indiana is on a roll. Seemingly every week, we see new job announcements in all corners of the state. It has become such a regular occurrence it is easy to forget how we got here. It’s because Indiana is a great state in which to do business.
This isn’t by accident. It’s because policymakers, business leaders and organizations, like the Indiana Chamber, have long advocated for pro-economy strategies that have helped move our state forward. We can’t risk taking a step backward and hurting our business climate.
And that’s exactly what a pay transparency law would do.
These laws, which require employers to disclose salary ranges in job postings or upon request, are gaining traction across the nation. Proponents hail them as a tool to combat wage gaps and empower employees.
However, for employers, these laws can present a set of challenges. They also represent a significant government intrusion into how businesses choose to execute their hiring practices. One of the most frequent refrains we hear from small employers is, “Keep government out of my business.” Pay transparency is the perfect example of legislation that interjects itself into a business’s hiring process.
A practical concern is the potential loss of leverage in negotiations for both sides. This allows employers the flexibility to negotiate between a wider range of wages. By legislating mandated transparency, businesses lose this flexibility.
Another worry is employee morale, which can take a real hit if a team member discovers a colleague with similar experience and performance is earning more. That can breed resentment and dissatisfaction—damaging company culture and potentially leading to increased turnover.
Pay transparency also risks stifling internal mobility. If an employee aspires to a higher position but sees a minimal salary increase advertised, they might be discouraged from pursuing the promotion. This hinders the development of well-rounded talent within the organization.
Some argue that transparency can also lead to “copycat” hiring practices. If a company known for high salaries reveals its range, competitors might simply match it to attract talent, leading to wage inflation that isn’t necessarily tied to performance or market value. The market and a potential employee’s skill set should determine wages, not mandated wage transparency pushed by anti-business forces from outside of Indiana.
It’s important to note that nothing prohibits Hoosier employers from posting job pay ranges. Many do this today. However, let’s not use the heavy hammer of government to fix something that isn’t broken. The demand for labor in Indiana is at an all-time high, and hiring qualified workers is one of the most difficult parts of running a business. This legislation would only make that task harder.
Indiana is the envy of our neighbors when it comes to business climate. Let’s keep it that way and not insert additional burdensome regulations—such as pay transparency—into an employer’s hiring process.•
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Eller is vice president of health care policy and employment law for the Indiana Chamber of Commerce. Send comments to ibjedit@ibj.com.
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