You should stop asking for salary history, but not for the reason you think

salary history

*Originally published by Payscale

Several U.S. states or cities have recently introduced, or are considering, a ban on employers inquiring about the salary history of job applicants as part of more extensive equal pay legislation. The reasoning? Because women still face a pay gap in comparison to similarly qualified men – 2.4 per cent based on PayScale’s most recent gender equity report – it was hypothesized that revealing salary history would perpetuate lower pay for women over the life of their career. And, we do see that the pay gap grows as women advance in their careers. At the executive level, women make more than 6 per cent less than their male colleagues (when holding all else constant except gender).

So, we decided to dig into the salary history question a bit more and figure out who’s being asked, how they respond and how that impacts their pay. In a new report, Payscale surveyed 15,413 job seekers who had active job offers in hand about whether they disclosed their pay at previous jobs at any point in the interview process.

The possible answers were:

  1. No, and they did not ask
  2. No, but they asked
  3. Yes, they asked about my salary history
  4. Yes, I volunteered information about my salary history

We expected that the original hypothesis would hold true, but we were wrong. Women who revealed their salary history actually had higher job offers than women who refused to disclose their pay. What was surprising is that refusing to disclose salary history didn’t have a negative impact across the board – just for women. Women who were asked for their salary history and didn’t disclose it had job offers that were 1.8 per cent less than women who answered the question when asked. However, men who didn’t disclose when asked actually had offers that were 1.2 per cent higher than men who did disclose. We controlled for all variables that could impact pay such as job title, company size, location, industry, etc. to ensure we were looking at similar candidates when evaluating the compensation offer differences.

So, why are women and men having different results when withholding salary history information during the interview process? I don’t know for sure, but I have some educated guesses.

Unconscious bias rears its ugly head … again

We know for a fact, based on numerous studies, that human beings carry bias about other human beings. We all do. We make snap judgments about other people influenced by our own upbringing and value system, by societal norms, by our anecdotal experiences.

We know that when people counter someone’s expectations, it can elicit a negative response. So, is it possible that hiring managers and/or recruiters are reacting negatively when women refuse to disclose their salary vs. when men do the same? It’s quite possible.

In one well-known study by Harvard researcher Hannah Riley Bowles (titled “Social incentives for gender differences in the propensity to initiate negotiations: Sometimes it does hurt to ask”), it was shown that both men and women react negatively when women initiate negotiations and advocate for themselves in negotiations.

Anchoring to a number

Another argument in ditching the salary history question has been that employers might inadvertently be anchoring to a salary number thrown out by a candidate, rather than sticking to the range they set for the position. But, what if female job candidates are anchoring to their own salary history (even when they withhold it from a new potential employer)?  I have often heard people say they weren’t sure what to ask for so they just tacked five or 10 thousand on to their current salary. That is like pulling a number out of a hat.

So, with this new data in mind, how should we proceed on the salary history question? Even though the results of this study are different than we might have expected, ultimately, the salary history question is still causing problems. What’s the path forward?

  1. Stop asking the question. It puts candidates in an awkward position of having to decide whether to disclose, and it could be negatively impacting female candidates – just not in the way we previously suspected.
  2. Price the job, not the person. The best way to price a position has always been to use market data and ensure that data is driving the decisions regarding compensation rather than anecdotal evidence. A candidate’s salary history is one data point. You don’t want it to unreasonably influence the offer. If it does, you could end up with internal pay inequities that lead to higher employer turnover.

 

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Lydia Frank is VP of Content Strategy for PayScale, the leader in modern compensation software. She writes a column on salary negotiation for Money magazine and has contributed articles to various publications, including Fortune, Harvard Business Review and TechCrunch. She is also a regular speaker on the topics of gender equity and salary negotiation.

 

See also:

Why salary transparency can make your business better

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