Salary History Doesn’t Equal My Worth!

Let’s say you take a job right out of college while you’re deciding whether you can afford graduate school or not. The work is engaging, but the pay is low. Still, you figure it’s worthwhile to start working and get what experience you can out of it. But what happens when you interview for another job a few years down the road and they learn what you were making? Do you really think another place is going to offer you vastly more than you were making before?

Earlier this month, Massachusetts Governor Charlie Baker signed into law a pay equity bill that the Boston Globe’s Shirley Leung describes as the “strongest equal pay law in the country.” In part the law makes it illegal for businesses to ask prospective hires for their salary histories. because doing so can depress wage increases for new hires and particularly affects women and minorities, who are more likely to have below-market average salaries.

When an employer asks for a prospective hire’s previous job salary, they often calculate a salary offer based on the previous income instead of on the market average for the position itself. As Victoria Budson, director of the Women and Public Policy Program at the Harvard Kennedy School of Government, told NPR,

What happens to people over time is if in that first negotiation—or those first few jobs out of high school or college—you are underpaid, then you really get a snowball effect….If each subsequent salary is really benchmarked to that, then what can happen is that type of usually implicit and occasionally explicit discrimination really then follows that person throughout their career.

Additionally, an employer may choose to judge a prospective hire’s competency based on their previous salary, corresponding their productive value with their monetary compensation—which is often misleading.

The first of its kind, the law takes effect July 1, 2018, and also includes a stipulation allowing companies that pre-emptively remedy for wage discrepancies to defend themselves from legal action.

Most importantly, it protects employees from retaliation if they choose to discuss their salaries, and research has shown that wage transparency increases feelings of fairness and pay equity, among other positive effects for a company or organization, such as increased collaboration. Additionally, the more data that’s aggregated on wages, the more statistical analyses can be used to tease out the separate factors that contribute to wage differences. In fact, at the beginning of this year President Obama proposed  to expand the federal effort to collect data on wages by requiring companies with 100 employees or more to provide data on employee salary by race, gender, and ethnicity to more closely study persistent wage gaps across industries.

This effort is one of many promising steps toward correcting wage differentiations stemming from biases that affect salary offers in hiring practices,  just one of a myriad of factors contributing to wage gaps by gender and race. Massachusetts joins states like New York and California, which have recently passed equal pay laws that also prohibit salary secrecy. However, we still need to see change at a federal level and encourage Congress to take action to reduce the gender wage gap. First introduced in Congress in 1997, the Paycheck Fairness Act (S. 2199) aims to outlaw salary secrecy, create programs to train women to better negotiate their salaries, and add enforcement to the Equal Pay Act of 1963 and the Fair Labor Standards Act. This legislation was reintroduced in the Senate in 2014 by Sen. Barbara Mikulski (D-MD) but has been repeatedly blocked from passing.

Pay equity is a humanist issue. In our values of equality and justice, humanists must stand against wage discrimination based upon race and gender. If we would like to make equal pay a reality, humanists must help to encourage legislation at a national level to support state and local efforts to increase fairness in the labor market.