Information is power: Fostering labor market competition through transparent wages

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.