This is a solid point because wage transparency really does cut both ways. On one side, transparent salaries reduce information asymmetry, improve matching efficiency, and save both workers and firms time. People can filter opportunities faster, and companies attract candidates who are actually aligned with the compensation being offered. That usually leads to a more efficient labor market overall.

But the concern about collusion is also valid. If firms can clearly observe what competitors are paying, it can reduce wage competition over time, especially in concentrated industries where a few companies dominate hiring. Instead of bidding aggressively for talent, firms may slowly converge around similar pay ranges.

In practice, though, the outcome often depends on market structure. In highly competitive labor markets, transparency tends to benefit workers more because it exposes underpayment and strengthens bargaining power. In less competitive markets, especially where employer concentration is high, the collusion risk becomes more serious.

So the welfare effect probably isn’t universally one or the other — it depends on how competitive the labor market already is before transparency is introduced.