Outside Offers, Matching, and Discrimination
By Bryan Caplan
One of the best ways to get a raise from your current employer is to get a better offer from a competing employer. You just tell your boss, “Match their offer or I walk.” The risk, of course, is that your current employer will respond, “Don’t let the door hit you on your way out.”
Question: Do employers ever get sued for discrimination because they failed to match outside offers? If labor markets are full of taste-based discrimination, you should definitely expect employers to be less eager to match outside offers for workers in protected classes. But I’ve never heard anyone complain about such discrimination.
Perhaps on some level people realize that alleged taste-based discrimination is usually statistical discrimination in disguise. Since your current employer already knows you as an individual, people interpret his unwillingness to match as postjudice rather than prejudice. But this line of reasoning should make us skeptical whenever a current employee (as opposed to a mere applicant) cries foul. So what’s the real story?
P.S. If you can find links to real-world stories about workers suing employers for failure to match outside offers, please post them in the comments.