The ‘Salary History’ Question Is Annoying. But Should It Be Illegal?
Over the past decade or so, the wage gap between men and women in the U.S. — even among senior executives with MBAs — has been scrutinized from every imaginable angle, and some analysts say they still can’t fully explain it.
Still, common sense suggests that, if a new hire’s salary is based at least in part on previous compensation, then someone who was underpaid in her last job will probably get lowballed in her next one, too.
Letitia James, Public Advocate of New York City, wants that to stop. “Requesting a prospective employee’s salary history perpetuates inequitable wages for women,” says James. She has introduced legislation that, like a Massachusetts law passed earlier this month, would ban job interview questions about what candidates earned in previous jobs.
At the moment, women in NYC earn a total of $5.8 billion less per year than their male peers, according to a study James’ office put out earlier this year, or $6,778 less in annual median income for each female employee in the five boroughs. Businesses operating in the city seem to be making more progress toward closing the wage gap than New York’s local government. Female municipal employees, says the report, “face a gender wage gap that is three times larger (18%) than the gap experienced by women working in the private for-profit sector (6%).”
James’ proposal is fine as far as it goes, but even if every city and town in the nation adopted a similar law, the gender wage gap would probably persist anyway, because its causes are so complex. “There’s no doubt that basing starting salaries, and subsequent raises, on past pay does perpetuate the wage gap,” says Benjamin Frost, global head of pay data at Korn Ferry. But an even bigger part of the disparity comes from “hidden biases that are baked in to the policies and structure of many organizations. So much of how companies operate hasn’t really changed since the 1950s, when the world was a very different place.”
A new Korn Ferry study shows that, in most companies around the world, the pay gap between men and women shrinks virtually to the vanishing point at the senior-executive and C-suite levels. Likewise, in the U.S., employers like Microsoft and Facebook say that, when comparing compensation for men and women of similar rank in their own companies, they find no wage gap. The sticking point is in how few women reach those heights. Korn Ferry’s research found that women overall earn less because they tend to rise into the middle levels of organizations — and then stay stuck there for much longer than their male peers, often for their whole careers.
Why is that? “In lots of unintentional ways, companies are designed to suit men’s strengths rather than women’s,” Frost says. Most employers, for example, reward negotiating skill (even when it has no connection to someone’s job as, say, a software developer), which tends to favor men. A subtler block to pay parity, Frost notes, is that “the way you get recognized and promoted, in most companies, is by raising your hand and putting yourself forward which, for a number of reasons, many women have been reluctant to do.
“We need to rethink the whole pipeline of talent in companies,” he adds. That includes “taking a more analytical approach to what success looks like, and exactly what skills are needed, for any given job and salary level — regardless of gender, race, or anything else.”
That’s clearly not impossible. At Google, for instance, departing chief of “people operations” Laszlo Bock came up with a system that assigns a dollar value to each job in the company and pays employees accordingly, period. Salary history, negotiating prowess, and other extraneous distractions just don’t figure into it. Straightforward as it may sound, getting to that kind of elegant simplicity is a whole lot more complicated than simply skipping questions about past pay in a job interview.