Will Salary History Bans Boost Women’s Salaries?

by Nancy Ordman

Gender-related pay gaps persist, despite decades of attention and efforts to ensure equal pay for equal work. Positive change is gaining momentum from a combination of local legislation and a signal US Appeals Court ruling handed down on April 9, 2018, that forbids employers from asking interviewees about their salary histories.

The importance of this change for women is easy to understand. Women’s salaries are about 80 percent of men’s salaries

Graphic credit: Mike Licht/CC BY 2.0

overall. A female applicant whose salary history reflects gender bias is more likely than a man to receive a lowball salary offer, assuming that the female applicant ticks off other job requirements equally as well as a male counterpart. The Court of Appeals for the Ninth Circuit, in California, ruled that using a woman’s salary history as justification for paying her less than a man is a violation of the 1963 law banning pay discrimination.

Even before this ruling, a handful of states, cities and other governmental units started banning the unpopular salary history question from interviews, most recently Westchester County, New York, and New York City and Chicago. The states of California, Delaware, Massachusetts and Oregon along with the city of Philadelphia have already outlawed the question for all employers; in Pittsburgh, public employers are prohibited from requiring salary history.

To be sure, gender-based salary differentials vary depending on occupation, geographic location, race and ethnicity, among other variables. Women in high-tech careers generally fare better than those who work in other fields. Women of color experience wider pay gaps.

Other factors contribute to the persistence of the gender-related pay differential. Women take more time off for childbirth and child-rearing, for example. Upper echelons of management, with commensurately higher salaries, still tend to be male-dominated. And fewer women go into well-paid tech jobs; in 2016, women earned only 18 percent of bachelor’s degrees in engineering and computer science, limiting the employee pool for businesses looking for tech workers. 

Will these new bans help? Maybe not. As Jennifer Doleac, a University of Virginia economist, pointed out, “if [employers] cared enough about [salary history] to ask it to begin with, they probably care enough about it to try to guess.” Employers might use prior salary as a productivity gauge, assuming that a high salary indicates a highly-productive worker, rather than as a tool to save money on a new hire – and without this data point they will be back to guesstimation.

Since the Appeals Court ruling applies only in the Ninth Circuit, employers elsewhere are bound only by laws in their own jurisdictions. Large employers with offices in multiple locations – with multiple relevant laws – could be in for more complexity in their hiring processes.