Sadly, even today, equal pay for equal work is still not a reality. According to 2016 U.S. Census data, women earn 80 cents compared to every dollar that men earn. And, in a 2019 PayScale survey comparing the average earnings of Black men and White men in the U.S., on average, Black men earned 87 cents for every dollar earned by White men. This means Black females are hit doubly hard by the pay gap, compared to their White male peers.
So it’s vital that CEOs commit to fighting gender and race discrimination in the workplace, not just in their words, but also in their actions. How to do this? Ground-breaking research shows that leaders can take 1 simple step to sizeably slash pay differences for Black and female employees: stop asking job seekers about prior pay. This action alone can substantially close the wage gap. But only if it is done by all companies across the board, not just by a handful. Many U.S. states have made it illegal to ask salary history. By comparing states with salary history bans (SHBs), to those without them, this new research shows that these laws triggered sizeably higher pay offers for Black (+13%) and female (+8%) candidates who took new jobs. These laws are aimed mostly at women, with many of them directly tackling equal pay and the gender wage gap.
Why do we need these laws? Because they stop job seekers getting starting salaries tied to low past pay. If a woman is paid less from the outset, and then limited by her past salary at each later job, she may never catch up. These laws makes employers less likely to keep the wage gap going, by basing salary offers for new hires on their past salary. This practice seems to disproportionately affect female and Black job seekers, at least in the USA. Yes, it may be unintentional, but it’s discriminatory nonetheless.
Why do disadvantaged groups get paid more, when employers don’t use salary history information? Because salary history gives employers a negotiating edge. Knowing that a job seeker is currently underpaid, employers can offer slightly more than their current pay, confident that the applicant will accept. But often the applicant is still paid less than they’re worth. In this way, the pay gap persists. But when employers don’t know salary histories, Black and female job seekers see a more level playing field.
Employers should be hiring and paying new hires for the experience, skills and qualifications they have, not for what they were paid in the past.
In the USA, asking job seekers about their salary history in job interviews is fast becoming a thing of the past. Is it illegal to ask this question in other countries? In Canada, yes. But sadly, not yet in countries like South Africa, the UK and Australia. Hopefully this will happen soon.
So, if a potential employer does ask the dreaded question about your past pay, what do you do? Negotiation experts suggest tactfully sidestepping it, with a response such as: “I’m looking for a package in line with competitive market rates and what this job involves,” or “I’d be happy to talk more about salary once we reach the offer stage.” And if you feel uncomfortably assertive saying this, ask yourself: “Would a man feel the same way?” I doubt it.
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