It was once a common interview question:
"How much were you earning in your previous position?" and other similar salary inquiries were the norm at job interviews across a number of industries. But recent data suggests that putting an end to these questions can help address long-term wage inequities. Researchers from Boston University concluded that salary history bans can significantly increase pay for Black and female job-switchers, while also boosting salaries for people across all demographics.
First of all, what exactly is a salary history ban?
Broadly, they're a set of limitations on questions potential employers can ask about a potential employee's past earnings. These salary history bans (SHBs) are typically passed into law at the state level, but also are occasionally passed locally, which limits them to cities or metro areas.
It's intended to help address something employers may not fully account for when hiring: institutional discrimination. As opposed to the individual form, institutional discrimination can be seen as embedded procedures and policies within companies that treat people unfairly. On the hiring level, it involves not just looking for diverse candidates to interview, but changing the way in which all candidates are interviewed and assessed.
What does the data say?
We all benefit when we don't have to share our past salary details. Across all demographics, job-switchers in states with SHBs reported 5% higher salaries than states without them.
Black and female applicants get even more out of the bans, with 8% and 13% average increases in starting salary, respectively. For the median wage renter in Boston, for example, an extra 13% could be the difference between being rent-burdened or not.
Why salary history bans matter
They help stop the perpetuation of past pay inequities. Black and female applicants see the greatest benefit because they've historically been underpaid in proportion to males and non-Black counterparts. With SHBs, disadvantaged groups are no longer tethered to wage data from jobs that have underpaid them, allowing future employers to make fairer offers.
For all workers, SHBs can also take away data that could be used as a bargaining advantage. When a potential employer knows what an applicant is used to getting paid, they know more about what offer the applicant might accept... and it may be lower than they'd have considered without salary data.
They clarify expectations on both sides of the table. BU's research of 41 million job advertisements concluded that the number of listings with salary information tripled in states with SHBs. With salary data available from the outset, both the employer and employee can have a better understanding of potential pay before they ever sit down for an interview.
Where we are now
SHBs are a relatively new development: it was only in 2016 when Massachusets became the first state to pass such bans into law. In the four years since, well over a dozen states (including California, Michigan, and New Jersey) and individual cities (like New York City and Chicago) have followed suit.
As of 2020, nearly a quarter of the private sector has adopted SHB measures, but this still leaves the majority of the country without similar protections. While the BU study is only a few weeks old and represents a single body of research, it could help push the popularity of SHB laws nationwide.