Meanwhile, men who won’t disclose compensation earn more than men who do
Women who are asked about their salary history during a job interview and who decline to reveal it tend to earn 1.8 percent less on average than women who do disclose their compensation, according to a new survey by PayScale.
And if men decline to disclose their earnings? They tend to get paid 1.2 percent more on average than men who reveal their compensation.
"What we expected was that revealing salary history would have a negative impact for women, but we didn't find that. Instead, refusing had a negative impact," said Lydia Frank, vice president of content strategy at PayScale, which provides compensation data and software. "There's a lot of research out there around unconscious bias that shows that we expect women to be cooperative and collaborative, so when a woman refuses to answer that question, it could rub people the wrong way."
At least six states or cities have banned—or are considering banning—employers from asking salary history questions: Delaware (effective December 2017); Massachusetts (effective January 2018); New York City (effective October 2017); Oregon (effective January 2024); Philadelphia (effective May 2017, but delayed pending litigation); and Puerto Rico (effective March 2017). California is considering similar legislation.
By forbidding the question in the first place, women won't be put in the position of having to refuse to answer, Frank said.
"That's absolutely the advice we're giving to employers: Don't ask the question and put candidates in an awkward position of having to decide whether to answer. It's easy enough to switch to 'salary expectations,' and that's really what the employer and candidate should be talking about anyway—the market rate for the position, not an individual's salary history. If salary history does manage to influence the offer, [that could] lead to internal pay inequities and employee turnover."
Kris Meade, a partner and chair of the Labor and Employment practice at Crowell & Moring in Washington, D.C., said she's not surprised by the finding.
"It may provide another piece to the pay equity puzzle," Meade said. "The research shows that women negotiate pay less frequently than men. As a corollary to that, I would expect that women who do disclose, and then negotiate, salary fare better than women who either fail to disclose or actually disclose but don't negotiate. Being prepared to negotiate pay is the key, whether one discloses prior pay or not."
Joe Schmitt, a shareholder with Nilan Johnson Lewis in Minneapolis, said that although there is social science data suggesting that women can be held to different standards than men when it comes to pay, there is also social science research suggesting that forcing a discussion about compensation is actually helpful to women.
"The suggestion that compensation is negotiable tends to reduce disparities in starting salaries between men and women, because it makes women more likely to negotiate," he said. "I believe Payscale's findings reflect that women who disclose their compensation are more likely to negotiate, which in turn is more likely to reduce pay disparities."
Job Group, Job Title, Industry and Age Influence Candidate Responses
Between April and June, PayScale interviewed 15,413 respondents who had pursued jobs. The survey asked the following question: At any point in the interview process, did you disclose your pay at previous jobs?
The available responses were:
- No, and they did not ask.
- No, but they asked.
- Yes, they asked about my salary history.
- Yes, I volunteered information about my salary history.
- I do not recall.
PayScale analyzed the responses by industry, job title, job group, job level, gender, age and income bracket.
When it came to job groups, the most likely candidates to disclose salary history during an interview were those applying for positions in human resources (44 percent), marketing and advertising (43 percent), and accounting and finance (40 percent), the survey found.
"With HR, if you've been on the other side of the table discussing compensation with candidates, where salary history is something you asked of candidates, being asked yourself might feel pretty typical," Frank said.
The job candidates least likely to be asked about their salaries were those applying for jobs in values-driven industries such as social services (67 percent weren't asked) and nonprofits and education (61 percent).
When it came to job level, those most likely to be asked about their salary history—but also among the least likely to disclose it—were people applying for C-suite jobs. Forty percent said they were asked about their compensation (compared, for instance, with 32 percent of individual contributors who were asked), while 26 percent refused to answer the question (compared with 9 percent of individual contributors). Moreover, when these job candidates did refuse to say what they earned, they tended to earn more than those who revealed their salaries.
"When it comes to higher-paying positions, an employer doesn't want to waste anyone's time—theirs or yours," Frank said. "So making sure you really understand salary expectations for those roles makes a ton of sense."
As for executive-level candidates' tendency to sidestep the question, "that has to do with confidence," she said.
"If you know your skills are sought after and you're at a level in your career where you're in a highly paid role, you probably know your value and are more confident in saying, 'Hey I don't really want to talk about my salary; I want to talk about the position and what the role is worth.' "
In addition, compensation for C-suite employees often encompasses more than base salary and standard benefits—such as a company car, for instance, or equity with the company. Employers may want to know if they can match that compensation before they seriously pursue the candidate, said Elizabeth Washko, co-chair of the Pay Equity Practice Group at Ogletree Deakins in Nashville, Tenn.
"A candidate with a compensation package that the employer cannot possibly match may not be worth pursuing," she said.
When it came to industry, those most likely to be asked about their salaries were people applying for jobs in finance and insurance (45 percent).
"Finance is a pretty compensation-driven and results-driven field," Frank said. "These are people who typically earn commissions and bonuses that [reflect performance]. Knowing a candidate's past [compensation] package helps to determine how high of a performer they are."
Meanwhile, 49 percent of people applying for such jobs revealed their compensation.
"If you're a high-performer, you want to brag about that, right?" Frank said. "You want to make it clear that you're valuable."
The older the survey respondent, the more likely they were to refuse to disclose what they earned: 28 percent of Baby Boomers refused to disclose their salary histories when asked, 22 percent of members of Generation X refused and 18 percent of Millennials refused.
"Think back on your own career," Frank said. "Essentially, [the interview involves] a power dynamic. The employer's asking you a question and you want to please and you want a job there, so as a young person you don't even question whether you're supposed to answer or not. It's not until over time, after you feel this may have negatively impacted you, do you even think to question whether to reveal" your compensation.
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Source: Society for Human Resource Management (SHRM)
https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/banning-salary-questions.aspx
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