The Salary History Question: Alternatives for Recruiters and Hiring Managers

The salary history question has been a staple of job interviews for many years. The intention behind the question, on behalf of the companies, is to determine whether the candidate’s expectations are in line with what they intend to pay for the position, although some argue that companies are trying to ascertain the lowest number they can offer the candidate and still get a “yes.”

Some believe that the salary history question runs the risk of perpetuating lower pay for those who have traditionally been paid lower, such as women, contributing to ongoing pay inequity or a pay gap. The thinking goes that if people have been routinely discriminated against because of gender, race or some other factor, their pay may be lower than the market value for the position. So, asking people their pay history as a means of determining a fair future pay offer may not actually be fair at all.

As a result, several cities and states have developed or are developing legislation around the salary history question, taking it off the approved list of questions during the recruitment process. While employees are jumping for joy (and money), some companies are less enthusiastic about the prohibition of the question. But just how prevalent is the salary history question? And what is the impact, to individuals and organizations, of asking about prior pay?

How prevalent is the salary history question?

In 2017, PayScale conducted a study to determine the prevalence of the salary history question. It turns out that while it may feel ubiquitous, it’s not actually as prevalent as you might think. In fact, when we surveyed over 15,000 job-seeking employees, only 43 percent were asked about their prior pay at any point during their interview process. In the study, PayScale identified four types of responses:

Percent
Not asked, didn’t disclose

51%

Declined to answer

10%

Asked and answered

33%

Volunteered

6%

In addition, we calculated the rate of refusal: those who didn’t disclose after asked for salary history compared with all those who were asked. The overall rate of refusal was 23 percent. Interestingly, median pay was highest among those who refused to disclose their pay ($67,200). That may be due to sheer confidence, job level or several other reasons, but the facts still hold.

Industry, Job Group and Job Title

  • The most likely employers to inquire about salary history are in the Finance & Insurance industry (45 percent “asked and answered”), which also has one of the lowest rates of refusal (18 percent).
  • The most likely job groups with “asked and answered” responses are Human Resources (44 percent), Marketing & Advertising (43 percent) and Accounting & Finance (40 percent). In fact, the number one job title with “asked and answered” responses was Human Resources Manager, where more than half were asked about their salary history and disclosed it.
  • Values-driven industries and job groups are the least likely to inquire about salary history: 64 percent of nonprofits and 61 percent of education employers reflected “not asked, didn’t disclose,” and 67 percent of Social Services were “not asked, didn’t disclose.”
  • The most likely workers to volunteer pay history were Outside Sales Representatives (22 percent), a job where prior pay is often a direct indicator of performance.

Job Level and Income Bracket

Salary History Disclosure by Job Level

Job Level

Asked (overall)

Rate of Refusal

VPs and Executives

54%

26%

Directors

52%

23%

Managers/Supervisors

45%

22%

Individual Contributors

41%

22%

  • Salary history is more likely to come up in an interview as you move up the career ladder, and the rate of refusal also increases the higher you go. VPs and Executives make up the group most likely to volunteer their salary history (10 percent, vs. 5 percent of individual contributors) and the most likely to decline to disclose (14 percent, vs. 9 percent of individual contributors).
  • People seeking higher income jobs are more likely to be asked about their salary history, but those who declined to answer tend to be at the highest income bracket.

Demographic Differences

  • Interestingly, there was no significant difference by gender when it came to the likelihood of disclosing or not disclosing salary history. However, 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.
  • The rate of refusal is higher among baby boomers than millennials: twenty-eight percent of Boomers declined to disclose their salary history when asked, vs. 22 percent of Generation X and 18 percent of the Millennial generation.
  • One of the highest refusal rates by metropolitan statistical area was in the Boston area, where the salary history question will become illegal in 2018. The Boston refusal rate was nearly twice that of the lowest rate of refusal, found in the Chicago area (30 percent vs. 16 percent).

What can companies do in lieu of asking the salary history question?

Let your pay brand drive your decisions

The way you pay says a lot about you. During the interview process, the way you communicate about pay says much more than the actual dollar figure you’re offering in terms of salary. Whether overtly or not, you’re passing along information about how your organization makes decisions about pay, how open your organization is to discuss the rationale for pay and ultimately how transparent and innovative your organization is about rewarding employees.

Asking “what’s your salary history?” indicates to candidates that your organization is the type that tries to haggle employees down and pay them as little as possible. It tells your prospective employees that you aim for bargain talent. Is that the type of values you’re hoping to project? If not, drop the question.

Let the market guide your compensation offers

Here’s another compelling reason to drop the question: With so much market data available to employees, they are starting to come to interviews armed with compensation data reports in hand. The trick is that they don’t always have the right compensation data. Maybe your organization is in a rural area and they are bringing data from a major metropolitan city across the country. Maybe you’re a smaller organization and they’re bringing data from some of the largest employers. Or perhaps you’re a non-profit and they’re bringing tech industry data to validate their preferred salaries.

You have to get ahead of the data game by bringing your own competitive market compensation data to the interview process. Knowing the numbers can help increase trust between candidate and recruiter, future employee and organization. Data that employees access isn’t always packaged for business use. When you identify your market data points, you’re making some key choices about how you prioritize pay in your organization, whether you know it or not.

Have useful conversations about pay

One of the main objections we hear about discontinuing the salary history question is that it’s useful for recruiters to know whether or not to waste their time talking with candidates. In very practical terms, sometimes the budget for the job and the expectations for the job are too far apart to bridge. There’s another way. In fact, there are a few:

  • Instead, ask “What are your salary expectations?” This gives the candidate the ability to share what they seek to make for the role. It lets you decide if you should keep talking with them. It also tells you whether they’ve done their homework or not. If they don’t answer with “Well, I’ve been researching and it seems that the going rate in the market is…” that gives you more information about their work as a potential employee.
  • Instead, share your hiring range for the position and explain why the range is set where it is. “We’re trying to grow such and such area, so as a result we’ve targeted very competitively in the market. Our hiring range is X to Y. Let’s talk about where you’d fit into that range based on your experience, skills and project results.”
  • Instead, reinforce the value of the position relative to the organizational goals and objectives, reiterate the market value for the role, and engage a conversation about what motivates the employee. “This position helps us ensure our customers get the best service, which is core to our organizational values. We recently did a market study and found that X is typical for the role. Are you most motivated by pay? Flexibility? The ability to really make an impact in the organization? How do you see yourself thriving in our organization?”

Ultimately, the salary history question seems to be on its way out, but that doesn’t preclude organizations and future employees from having meaningful conversations about pay. It starts by clarifying organizational priorities, understanding your culture, determining the market value for your positions and then messaging those to your prospective employees through the types of information you share during the recruitment process.