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The Annual “Sunshine List” Fuss

Each March, the Ontario government posts a list of its employees with a before tax income of more than $100,000 .   There is a one day outrage, and then the story disappears until next March. The list for 2010 was published yesterday.  Here is the list, and here is a Toronto Star article about it.

This requirement dates from 1995, when $100K was a lot more money than it is today. In fact, the Star piece notes that if indexed to inflation, the $100K in 1995 would equal $134K today, and if that was the cutoff, the list would be 74% shorter than it is, though $100K is still far higher than the average income in Canada.

What do you think the policy justification is for this transparency law?

As I noted last year, I don’t have a problem with this list.  My beef is why we stop with public sector employees who make more than $100K?  If you believe in the “free market”, neoliberal market approach to governing employment, then you should support a law requiring ALL wages and salaries to made public.  Require Wal-Mart to post how much it pays its cashiers, law firms to post how much they pay their lawyers, et cetera.  I think workers would be interested to know how much employers pay their employees across the economy.  I think workers would be interested in seeing how much more money their bosses earn.

In the language of economics, this information would facilitate more informed decision-making about job choices and therefore more efficient labour markets.  So how come the free-marketeers aren’t always lobbying for an across the board salary disclosure law?

The neoliberal market model already “assumes” that this information is publicly available.   Joe Plumber is assumed to know that Company X pays $30 per hour for plumbers and Company Y pays $35, when his employer only pays $25.  Since he knows this, he will quit his job and take a job at Company Y.  This will cause his former employer to raise its rates in order to attract new plumbers.  And this wonderful, virtuous market circle ensures that wages remain at the perfect level, where supply and demand for plumbers meets at the ideal wage rate.  This fictional world breaks down if in fact workers have hardly any knowledge of what the conditions of work are elsewhere–which is in fact the real world.

So, the free-marketer ought to be on board for a law requiring ALL employers to disclose the compensation levels of ALL employees.   Yet we don’t have such a law.  Strangely, we do require that the terms and conditions of employment for UNIONIZED workers be made public, but not those of nonunion workers.  I presume that is because the state doesn’t trust unions to properly inform their members of the terms of collective agreements, or because the state believes that collective agreements are “public” documents, whereas individual employment contracts are private.

What do you think?  Should we have a law that requires all wages and salaries, for every worker in Canada, to be publicly disclosed?  Would you support such a law?

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2 Responses to The Annual “Sunshine List” Fuss

  1. Janice S. Reply

    April 2, 2011 at 11:24 pm

    While I understand the concept of the government wanting to be “transparent” to the public, I question why privacy legislation is not applicable here. As you discuss, no other individuals’ salaries are published for the public’s eyes and I suspect if a list of salaries for a specific company was found in a recycle bin and published in a newspaper, there would potentially be legal action.
    As an HR compensation professional, I don’t agree that all workers’ salaries should be published due to confidentiality and competitive reasons. Also base salaries are not the only consideration in comparing one company’s total compensation to another’s. Other offerings such as benefits, pension, bonuses, shares, etc. need to be factored in.

    • Doorey Reply

      April 3, 2011 at 12:34 pm

      Thanks Janice. My point is really about the hyporcracy of neo-classical economic theory. That theory would have us believe that labour markets are nearly perfectly competitve precisely because workers have full or near full information about other ‘better’ jobs that they will then jump to. But as you seem to agree, in the real world, rather than encourage transparency of working conditions to produce more competitve labour markets, we do the opposite–we treat terms and conditions of employment as if they are of great competitive value and should be kept secret. This secrecy should be considered to undermine the neo-classical model, but supporters of this model ignore this fact, since they also want little government. You can’t have both: either we want policies that address information assymetries, which means strong transparency laws, or we want secrecy and employee privacy, which means we will never have perfectly competitive labour markets and we should just stop pretending we do. thanks for your comment.

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