Salary History Ban Benefits Women, African-Americans
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What is the main topic discussed in this episode?
Here's your money briefing for Thursday, June 18th. I'm J.R. Whalen for The Wall Street Journal. How much did you make at your last job? That's the kind of question that hiring managers love to ask job applicants. It's also one that's been banned in some places. Now there's new research about what happens when employers are barred from asking about salary history. And it turns out the groups that benefit the most are African-Americans and women.
hiring managers and human resources departments are effectively acting in a way that perhaps perpetuates discrimination. Now, they may not be biased or racist, but because they have these practices in place that look at salary history and then use that to determine what they should offer an applicant, they may be inadvertently perpetuating these sorts of inequalities.
What is the salary-history ban and where has it been enacted?
That's our reporter, Amara Omaquay. In a moment, she'll join us to discuss the work that's been done on salary history bans and some of the revealing findings from the research.
Racial equality has been top of mind for many people lately, and companies have been looking for ways to make their workplaces more equitable. New research from Boston University shows that African-American and female job seekers get a big bump in pay when employers can't ask for their salary history. Our reporter Amara Omeke is with us to explain.
Why did states begin banning employers from asking salary history?
So, Amara, is the banning of asking salary history questions of job applicants a national law?
So it is not a national law, but several states and local jurisdictions have passed some sort of salary history ban. The exact nature of the ban will vary depending on the location. But Massachusetts in 2016 became the first state to pass such a ban. And since then, we've seen several other states and local jurisdictions follow suit.
Why did states do that?
First, it takes away the bargaining power from the employer and kind of puts power back in the hands of an applicant, right? Because if the employer knows how much you've made, they can use that to sort of determine what to offer you when they give you a job offer. And so it kind of puts bargaining power in the hands of the employer.
What unanswered questions and limitations did the researchers identify about the study?
The other thing that economists I spoke to said is that if you are part of a group that has faced historical discrimination in the labor market, and because of that, you've been paid less than perhaps your peers or comparable workers, an employer can use your wage history to kind of perpetuate those inequalities. So it's a way of making sure that the playing field is level as people are in negotiations for how much they should be paid.
Now, how did the research indicate African-Americans and women have benefited from not being asked about salary history?
When salary history bans go into effect, it has a considerable benefit for African-Americans and women who are changing jobs. So the study basically found that African-Americans who were covered by a salary history ban, when they were changing jobs, they saw an increase in pay that was 13 percent higher than comparable workers who were not covered by a salary history ban.
Could other hiring bans like Ban the Box produce unintended consequences?
And women also saw a relatively greater increase in pay than women who were not covered by a salary history ban.
What does this study data tell us about wage gaps?
The lead author on this study said that the research would suggest that salary history bans could be a way to address wage gaps. Again, going back to the idea that if you think about minorities and women as people who have faced discrimination in the labor market, eliminating the ability of employers to look at this one factor could ensure that there is more fairness for the wages that they get in new jobs.
And what does the data say about different kinds of discrimination?
The lead author on this study said that hiring managers and human resources departments are effectively acting in a way that perhaps perpetuates discrimination. Now, they may not be biased or racist, but because they have these practices in place that look at salary history and then use that to determine what they should offer an applicant, they may be inadvertently perpetuating these sorts of inequalities.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:52
2
What is the salary-history ban and where has it been enacted?
0:52–1:28
3
Why did states begin banning employers from asking salary history?
1:28–2:18
4
What unanswered questions and limitations did the researchers identify about the study?
2:18–3:16
5
Could other hiring bans like Ban the Box produce unintended consequences?
3:16–4:40
6
How much do African-Americans gain from salary-history bans when changing jobs?
4:40–5:35
7
How do salary-history bans affect women’s pay and the broader wage gap?
5:35–7:18
Speakers
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