There are two approaches for making laws around salary history disclosures during a job interview: we can make it illegal for potential employers to ask for salary history, or we can make it illegal for them to use salary history when making pay decisions. PayScale recently surveyed over 15,000 job applicants regarding salary history disclosures during the job interview process. We learned that how and whether these questions are asked or answered matters for what people bring into the workplace.
Show me the money
First, let me present what I deem to be the best argument in favor of salary history disclosure (Note: some are just downright bad, like, “How else could an employer know what to pay for a position?”). When we think about interviewing, one of the primary questions the employer needs to solve is figuring out how productive the employee is. The assumption is that there is substantial variability between employees’ abilities — how do you find out if someone is going to kill it at work or fall flat?
One option that employees have is to send a signal of how good they will be. Signals are useful to an employer if they provide some information about unseen ability to the potential employer. When (or if) salary history meaningfully reflects ability, that history can tell us a lot about someone’s ability. The closer the relationship between pay and ability, the more significant that number becomes.
A candidate's salary history is only helpful if it tells you something about their past performance.
We looked at how salary history disclosure varied by job title. When it comes to volunteering salary history, nobody came close to outside sales representatives – 22 percent of them volunteered their salary history unprompted. Sales rep pay is largely driven by commission, so pay is tied closely to closed deals. It’s easy to say that you can sell, but talk is cheap. It’s harder to doubt a big fat check with your name on it, signed by a previous employer.
If you’ve got nothing nice to say…
So, what’s the big deal? And why the difference between asking about salary history and using that information to determine how much this employee will be paid?
The problem is that pay still doesn’t meaningfully reflect ability for most jobs. Many companies still struggle to adequately pay for performance. Pay may reflect your ability as a negotiator, but that may have nothing to do with your day-to-day job — a data analyst who out-negotiates their manager may get paid more, but that does not make them a better analyst. What’s more, salary history may reflect inherent biases in how pay is determined, such as gender discrimination.
Those who earn the most will always stand to benefit from sharing how much they earned, whether it is an accurate reflection of their merit or not. An employee who keeps silent about their salary history is still saying something, then: they don’t gain anything by disclosing. This is why it may not be enough to keep employers from asking about salary history.
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