March 10, 2017

New York City’s Ban on Salary History Questions: More States to Follow?

By ThinkingAhead

In 2015, women earned 79.6 cents for every dollar men earned, according to the Census Bureau. Some suggest that women often earn less than men — a well-documented wage gap that’s even worse for women of color — because they’re less likely to negotiate when it comes to salary offers. disputes this theory: although 42 percent of women negotiate their salary (compared to a similar 44 percent of men), only 43 percent report receiving the salary they hoped for (compared to 46 percent of men). Studies also show that women are more frequently penalized for salary negotiations than men.

New laws regulating the disclosure of salary histories hope to help close the wage gap and address hiring discrimination for women and minorities. Last year, Massachusetts passed the first law in the United States banning employers from asking job candidates about their salary history. Since then, two cities have followed suit: Philadelphia and, more recently, New York City in October 2017. More than 20 states, from California to Georgia to Vermont, are considering similar legislation.  

No Good Options

Studies show that women, minorities, and other disadvantaged candidates have no good option when it comes to negotiating salaries. If they don’t negotiate, they’re likelier to be paid less than other colleagues; if they do negotiate, they’re often subject to higher social penalties. For example, found that both men and women penalize women who asked for more money. According to the study authors, “perceptions of niceness and demandingness explained resistance to female negotiators.”

As far as salary history is concerned, if a candidate (female, minority, or otherwise) who earns a comparatively low salary is asked to reveal their earnings, chances are their would-be employer will offer them a correspondingly lower salary. Because the salaries of disadvantaged candidates tend to be lower in general, this perpetuates the problem of the wage gap.

Under these new laws, employers will no longer be able to ask candidates about their salary histories, forcing them to base offers solely on market rates. If the new rulings work as planned, that’s good news for all job candidates, especially women and people of color.

Although existing salaries will be unaffected by the new law, employers should be less likely to engage in discriminatory hiring practices under these guidelines. But will they?  

Baffling Gender Generalizations

A study by Harvard Business Review showed that women who were asked to disclose their salary histories and refused were offered 1.8 percent less than women who were asked and did disclose. The opposite occurred when men refused to disclose their salary histories: they received offers 1.2% higher than men who did not disclose.

The study couldn’t definitively conclude why not discussing salary history might negatively impact women and positively impact men, but it did suggest a few hypotheses. One pertinent factor is the social penalty women experience when negotiating higher salaries. Employers may also assume that women who choose not to disclose their salaries earn less than they might otherwise assume.

As a result, although the intent of these laws — banning companies from asking the salary histories of women and minority candidates so that those histories can’t be used to justify lower pay — is noble, they may not achieve it in practice. At the end of the day, inherent bias and gender or race-based assumptions about salary history may prevail.  

How Recruiters Can Help

Although these new laws are a step in the right direction, they’re unlikely to solve a problem as pervasive and complicated as the wage gap overnight. That’s where recruiters come in: candidates and hiring managers are better able and often more likely to be transparent about salary issues throughout the hiring process. While questions about salary history are becoming taboo (and, in some cases, illegal), questions about salary expectations should be encouraged — and recruiters can broach the subject earlier and more objectively.