Is Asking for
Salary History … History?

The Truth About the Salary History Question

If you’ve ever interviewed for a new job, it’s likely that the most uncomfortable part of the interview process was negotiating salary. That can be particularly true if the interviewer asks you how much money you are currently making, or how much you made at your last job. Many job hunters feel obliged to answer this question, and many hiring managers wrongly presume asking it is the best way to arrive at an acceptable offer. But here’s the thing – your salary history is nobody’s business but your own.

Legally, interviewees are under no obligation to answer it. In fact, doing so may suppress their salary for the duration of their career. For this reason and others, a campaign to ban employers from asking prospective employees for their salary history has recently been gaining momentum.

What You Were Paid Doesn’t Matter

The market value of an employee is not based upon what he or she made at past jobs. Rather, it’s based upon what workers in the same job, who possess a similar skillset and experience level, are making in the same labor market (metro area, company size, industry, etc.)

PayScale’s research has shown employees who are paid fairly are more likely to have a higher level of satisfaction at work and consequently stay with their employer for a longer period of time. Other studies have shown happier employees are more productive, and, as reported in Forbes, “there’s plenty of hard evidence that shows that happy employees lead directly to better performance and higher profits.”

The alternative, employees working for lower wages than they deserve, may seem like it would benefit the employer. But the truth is, workers who believe they’re underpaid are considerably more likely to be disengaged, dissatisfied at work, and to be seeking a new job.

As Carla Williams, vice president of human resources at SpenDifference, a PayScale customer, explained to USA Today recently, “We don’t want to get people ‘at a bargain;’ that’s not good for anybody.”

Furthermore, basing a new hire’s salary on what they made at previous jobs could potentially cost them thousands – if not hundreds of thousands – of dollars in wages over a lifetime; the perseverance of the gender pay gap is often attributed – at least partly – to this practice.

“By prohibiting employers from asking about salary history during the hiring process, we will ensure that being underpaid once does not condemn anyone to a lifetime of inequity,” said Public Advocate Letitia James, lead sponsor of legislation banning employers in New York City from asking applicants for their salary history. The law takes effect on Oct. 31, 2017, and follows similar measures passed in the city of Philadelphia and the Commonwealth of Massachusetts. And last year, Congresswoman Eleanor Holmes Norton (Dem.-DC) introduced a bill to prohibit employers from asking job candidates for their salary history during the job interview or salary negotiation process on the national level.

Whether a nationwide ban on asking for salary history will ever become law is hard to say, particularly given the current political climate.

In an effort to learn more about how commonly the question is asked of prospective employees, whether it is asked more or less for certain types of workers, how likely interviewees are to answer the question, and whether refusing to answer has any effect on an employer’s salary offer, PayScale surveyed our users. This is what we learned:

43 percent of respondents were asked about their salary history during the interview process. Nearly one quarter of those who were asked declined to answer.

A woman who is asked about her salary history and declines to disclose earns 1.8 percent less than a woman who discloses. If a man declines to disclose, he gets paid 1.2 percent more on average.

This is a disturbing double standard that may be the result of ingrained gender bias. Are women who refuse to disclose their salary penalized because they’re seen as unpleasant? And are men who refuse seen as confident?

Age Brackets

Refusal rates by age groups

Income & Seniority

Refusing to disclose salary history is most common in the highest income brackets, and for jobs at the Vice President and Executive level.

54%

of Individual Contributors indicated that they did not disclose their salary history and were not asked.

36%

of VPs and Executives reported the same. Interestingly, VPs and Executives are the group most likely to volunteer their salary history and most likely to decline to disclose.

Industry & Job Title

Refusal rates by industry

Outside Sales Representatives are by far the most likely to volunteer their salary history (22 percent). For sales jobs, compensation is frequently a clear indicator of past performance.

Financial Analysts are the most likely to refuse to disclose their salary history (44 percent). Data Scientists also had a high refusal rate (42 percent).

Over half of Human Resources Managers were asked their salary history and disclosed it. Maybe because they’re used to asking the question of prospective employees.

Future History

The salary history question may soon be illegal in more states. Instead of basing pay off of a past salary, it’s significantly better for both parties to determine a fair value in the job market by accounting for experience, location and other factors.

If you’re currently interviewing for a job, take PayScale’s free salary survey to find out what people like you are making in your area.

And learn more about the salary history issue – and how to handle the question if it comes up in your interviews – on the Career News blog, here.

And if you’re an employer concerned with paying appropriately for your market, read our whitepaper The Salary History Question: Alternatives for Recruiters and Hiring Managers here, and learn more about PayScale’s suite of compensation software products – that can help you pay the right way.

To see the methodology used to create this report, click here.

How Should I
Pay?

When you get compensation right, you attract and retain the best talent.

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Worth?

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