Right now the economy, by most all of the normal metrics, is doing extremely well. Yes real wages are flat, but the stock market is hitting record highs and accelerating, unemployment (even more realistic measures like U6) is lower than it's been in a long time, inflation is stable, and so on. So I don't think it's really reasonable to take as an assumption that people behave in a certain way during a bad economy and imply we're in a bad economy. I would completely agree with you [about the state of the economy], but this is not a majority view so we can't extrapolate outward.
And a bit of a tangent here but the "it doesn't matter if my neighbor makes more than me as long as I'm improving at a decent clip" is also a bit dubious. One social study that has repeated and reproduced countless times is that people are happier being the king among rats than a pauper among kings. People ought care about themselves objectively. In reality we measure ourselves relatively. Kind of a bad trait for a species seeking to make global progress, but again - that's all a tangent that's way out there!
As for my own view, the way to "cure inequities" is to ensure equal opportunity. It turns out time and again the medicine is rather worse than the disease when we start working to ensure equality of results. I'm actually in favor of this law since I see no positive result from employers asking for employee past earnings. What's offered to somebody should not be based on what they earned in the past like some sort of soft caste. It also takes another burden off applicants. However, I would be rather shocked to see this have any meaningful effect whatsoever. An employer is going to have a high price and a low price. I don't see removing one tidbit of information making all that of substantial changes to either, or the applicant's ability to more effectively hit the high. But I would absolutely love to be proven wrong.