There’s a hot trend sweeping the field of equal-pay legislation right now, and business leaders aren’t happy about it. Last summer, Massachusetts passed the country’s first law that prohibits employers from asking job applicants for their current salaries or salary histories. The legislation was touted as a way to counter the pay discrimination that can follow a woman throughout her career when the salary bump she gets with each job move is based on pay that’s already lower than that of her male peers. Business alliances in Massachusetts opposed the law, calling it “counterproductive” and “misguided,” and claiming it would lead to “unbridled litigation.”
It passed anyway, and lawmakers in other states and cities are now pushing similar measures. Philadelphia’s ban on asking for salary histories will take effect in May, though conservatives in the Pennsylvania state Senate are trying to block it and the city’s Chamber of Commerce fervently opposed it. New York City passed its ban last Wednesday. California’s ban took effect in January as an amendment to an existing fair pay law. Washington, D.C.’s city council is considering a similar bill that would also require employers to publish salary ranges for open positions. And D.C.’s delegate to Congress, Eleanor Holmes Norton, has joined several members of the House in proposing a federal prohibition on mandatory salary-history sharing.
In an editorial this week, Bloomberg called such legislation a “gag rule that won’t help women advance.” It’s “policymaking by anecdote,” the editorial board wrote, arguing that no studies prove it will help mitigate the gender pay gap. “There is real danger, on the other hand, that such a ban could backfire,” the piece went on. “If employers are legally barred from asking about salary, they might instead guess at what an applicant earns—and guess lower if that person is female.”
Bloomberg is right in at least one regard—there has been no specific research on the efficacy of laws that keep employers from basing new workers’ salaries on their old ones. Here’s why: These kinds of laws have never been enacted before. The Massachusetts law doesn’t take effect until summer 2018, and researchers will need at least three to five years of data to come through before they can make an educated assessment of the law’s efficacy. When legislators and advocates draft new laws, they don’t always have concrete proof that the laws will work as intended—they draw on whatever data and existing research they can find to make their best guesses, then evaluate progress later.
Luckily, in their development of this latest batch of fair-pay laws, lawmakers found no lack of existing research to support the idea that pay equity is hampered by businesses and recruiters asking for salary histories. A major 2013 study from the American Association of University Women found that women get paid 6.6 percent less than men in their very first jobs, even when controlling for personal demographics, occupation, college major, hours worked, and location. This gap cannot be explained through any means but gender. Studies have shown that women are less likely to negotiate their salaries when they get job offers, and when they do, they tend to ask for less than men. (This is for good reason: Other research has found that men and women who negotiate their salaries using the same script are perceived differently by male viewers, and that while all people who negotiate their salaries risk seeming “unlikable,” evaluators only give women demerits for being unlikable; they don’t care if men come off that way.)
According to Victoria Budson, executive director of the Women and Public Policy Program at Harvard University’s Kennedy School, since research has shown that women start out with a lower salary, the idea that they will make increasingly less when employers base future salaries on that first lower salary is “empirically true,” even if no researchers have been able to evaluate that specific claim. “We can’t only move things forward once we’ve tested them,” she told Slate. “What we know is when women—and particularly women and men of color—get hired, people are more likely to underpay them. And when you peg your offer and salary based on what someone’s made in their last employment, you then replicate whatever discrimination people have faced in prior jobs.”
There has also been significant research on what’s called the “anchoring effect,” a cognitive tendency that biases people toward the first piece of information they encounter in decision-making processes. A University of Idaho study published in 2011 showed that the first number offered by a job applicant in a salary negotiation, even an “extreme implausible” number, provided an anchor that raised the applicant’s eventual offer. If the first number in a salary negotiation is an applicant’s existing low salary—perhaps one that’s lower than it should be due to race and/or gender bias that’s squashed its growth—the employer’s offer will likely be lower, too.
Part of the problem of equal pay research, the kind that might have convinced Bloomberg’s editorial board of the potential efficacy of salary-history bans, is that the salaries of employees at private companies aren’t public. “To research [pay differences], you need willingness to be researched,” Ariane Hegewisch, employment and earnings program director at the Institute for Women’s Policy Research, told Slate. “Companies are very wary of opening their books, because their boards will say, ‘Are you crazy?!’”
Recruiters and job-search platforms can provide some insight. Hired, a clearinghouse for tech and start-up gigs, analyzed 100,000 job offers for 15,000 applicants from 3,000 companies last year. Men got higher salary offers than women for the same job title at the same company 69 percent of the time. Because of the lack of public pay data, though, a lot of salary information we have comes from documents revealed through lawsuits. In 2004, Boeing paid $72.5 million to female employees who’d filed a pay-discrimination suit against the company and proved that women were getting paid less than men. Hegewisch says a large part of this systemic wage gap stemmed from quick hiring waves in which company leadership authorized lower-level managers to offer new hires 20 percent on top of whatever they were making at their current jobs. Every time they did that to a man and a woman who were already coming in at different salaries from similar previous jobs, Boeing widened their internal wage gap. When those new employees got 10-percent raises after a year or two, the gap widened further.
It doesn’t take a Ph.D. to understand how hiring managers piling 10- or 20-percent raises on salaries that start out 6.6 percentage points apart will yield very different lifetime incomes and impede women’s economic advancement. But banning employers from asking about past salaries could also help prospective employees coming in with other disadvantages. Hegewisch says AARP supports this kind of legislation because older workers who’ve lost their jobs but were making higher salaries sometimes have trouble getting interviews with managers who think they can’t afford such a well-paid employee, even if the job applicant is perfectly willing to take a pay cut for a job. Other people who’ve left the workforce for a couple of years to care for an elderly relative or child can face very steep penalties when they return, because their skills might have lapsed. Five years down the line, they’ll be more than caught up, but their salaries never will if they’re always based on their previous pay.
Katie Donovan, the founder of consulting firm Equal Pay Negotiations, helped write the Massachusetts legislation after years working in staffing and software development for job-recruiting tools. She told Slate that recruiters will often use a previous-salary question to help them narrow down a group of hundreds of digital applicants. Their attitude is “too high, we can’t afford you; too low, you must be bad at your job, or you’re not a high enough level,” Donovan said. Managers will often assume they’re missing something if they see a someone coming in with a too-low salary, even if it’s higher than what she should statistically be earning for her race and gender.
So these are the potential benefits of the equal-pay legislation that’s sweeping liberal cities and states around the country: fewer opportunities for companies to judge employees based on previous pay instead of qualifications; a more-level playing field for women and people of color who face barriers to earnings straight out of the gate; and a surely imperfect but nevertheless significant obstacle inserted into the cycle of gender discrimination, low pay, and respectively low raises that compound over a woman’s lifetime. The potential downside, according to Bloomberg—besides the possibility that the legislation might not do what lawmakers hope it will—is that employers might lowball women because they’ll assume she earned low pay at her current or previous job.
The good and bad news is that companies already make women lower offers than they make men, and with more online resources for salary research than ever, there’s only so much lower employers could possibly go. There’s also no provision in these laws that bans employees from voluntarily disclosing their current salaries if they think it will help them in the negotiation, so if a lowball offer is truly insulting, applicants can reveal that information, as they’ve always been able to do.
In the end, no matter the legislation, some determined businesses will find ways to continue paying women less than men. Hegewisch recalled talking to a woman who was proud to have negotiated her salary and knew she was making around the same salary as her male peers—only to discover later that the company was giving those men far larger bonuses than she got. “In a way, we know there is no silver bullet,” Hegewisch said. Keeping employers from relying on women’s past salaries will address one contributor to pay inequity, but yes, women will forever contend with lowball offers and sexist bosses. It won’t serve them any better to wait for a silver bullet that will never come.
