To close wage gaps, ban asking about salary history?

Banning employers from asking about salary history can help close the wage gap between white employees and those of color and between men and women, research finds.

The paper, which is not yet peer-reviewed, looks at the effects of salary history bans in the 14 states that have passed laws prohibiting employers from asking prospective hires about their past pay.

Across the United States, men outearn women in comparable jobs by 15%, and white employees outearn their Black peers by 11%, even after accounting for such differences as education, experience, occupation, industry, region, hours worked, and union coverage, says study leader Jim Bessen, executive director of the Technology & Policy Research Initiative (TPRI) at Boston University’s School of Law.

Women also take an extra pay hit related to the additional burden of childrearing and household duties that they typically do more of than men, Bessen says. “What our study is showing is that a very large part of the residual [wage] gap is for things that aren’t related to productivity,” he says. “It’s related to the [salary] bargaining process—possibly [tied to] discrimination or other inequities.”

In a paper reporting their new findings, Bessen and his team write, “Salary history reveals information about the applicant’s reservation wage”—the wage they are willing to accept—”that might give the employer a bargaining advantage. Job applicants currently suffering from discrimination or other inequities might well be willing to accept a lower wage offer than other workers with comparable capabilities.”

But discrimination can’t be blamed fully for wage differences, the study authors say: “For instance, they might reflect group differences in negotiating propensity. But salary histories enable a form of institutional discrimination. Even if employers do not individually discriminate, the use of salary histories appears to perpetuate the effects of past discrimination or other group inequities.”

That makes salary histories “a target for policy change,” the researchers conclude.

The study was inspired by insights from research the team previously conducted into technology measuring the success of help wanted ads, says Bessen. He and TPRI coresearchers Chen Meng, a postdoctoral associate, and Erich Denk, a research data analyst, noticed in 2018 a tripling of ads listing jobs’ salaries, the result of bans on salary history inquiries. The TPRI and the Ewing Marion Kauffman Foundation supported the new study.

Bessen shares more about the findings below:

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