Salary History, Yes or No?

I like talking about money. I think talking about personal finances is important. I disagree firmly with the idea that polite company does not discuss money. Money is hugely important in all of our lives. It is a major factor in decisions we make every day. And like the ad campaign says “the more you know…”

I like talking about money so much that I used to have a blog dedicated to personal finance. I have been an active participant on a money focused message board for almost 10 years. When students in my department ask me how much money I make, I give them an actual answer.

And yet, there is one time when I believe you should not be talking about your finances, or perhaps, I should say, your past finances. I do not believe you should share your salary history with a potential employer.

This came up on the financial message board earlier this week, when someone shared a July article from Liz Ryan at Forbes, called Five Things Your Salary History Says About You. Like me, Liz Ryan does not believe that job seekers should share their salary histories. But the hiring manager writing her believes otherwise, because the salary history lets him know “the level of experience and quality” he is getting in a new hire.

Except that it does not. The person’s work history, the information on their resume/CV tells a hiring manager their level of experience and quality. Salary history does not take into account their actual quality of work. It does not. We all know the person who makes nowhere near what they are worth. And we also all know someone who makes way more than the value they actually bring to the table.

There are a lot of other things that salary history does not take into account, either, actual financial considerations- things like benefits, flexible work schedules, telecommute options.

There is only one thing a job candidate’s salary history tells a hiring manager. And that is their salary history. That is it. And hiring managers only use that information for one purpose – to extrapolate what is the least amount of money they can get away with offering this person to take the job.

That is it. That is the sole reason for wanting a salary history.

The class I had to take on negotiations as part of my MBA program was overall not a great class. By the end, we as a class were in revolt and the teacher was not asked to come back and teach the next year. But I do remember some important things from that class about negotiating.

One of those things is that it can be very powerful in a negotiation to set the goalpost. Being the first person to put a number out there means that now everyone else has to deal with your number. That is great, IF you know the value that you are offering. If you do not know the value of what you are offering (and may times, we as job seekers do not), you are in danger of setting the goalpost too high, so high that the other party with just shrug and walk away, because they are not willing to get close to that. Or, as is more often the case as the employee in salary negotiations, you are in danger of setting the goalpost too low. And you sell yourself short. But even then, at least you are the one setting the goalpost.

The biggest problem, in my mind, with providing a salary history is that now I, as the job seeker, am not setting the goalpost. Nor is my potential new employer (which they can easily do by providing the salary range for the position). Instead, my past employers have now set the goalpost. People not even in the current negotiation, have set a goalpost.

And this goalpost very likely not even relevant. The negotiation I am in with a potential new employer is not about how much money I was willing to take to do a job with my last employer. It is about how much money I am willing to take to do a job with this new employer. And that could be more. It could also be less, due to factors like benefits, commute, etc.

I do not know a whole lot about negotiations (really, the class did not go well), but I do know that it is rarely a good idea to let a third party, especially a third party who might have some interest in disrupting the negotiation, set the goalpost.

There is another big reason I am anti-salary history sharing, and that is the same reason that some states (four at this time – Oregon, California, Massachusetts, and Delaware) are using to make it illegal to require a job candidate to share it. And that is that using salary history as the base for making an offer of new employment has the danger of turning past, purposeful discrimination into systematic and institutional discrimination.

We have all sorts of research that tells us that women and people of color get paid less to do the same jobs as white men. I am not going to argue all the reasons for the wage gap. But it is real. And we know very well that in the past, women and people of color were purposefully offered lower salaries by employers, because they felt they could get away with it. Because they believed that those populations were less likely to negotiate or ask for more. And offering someone less money to do the same job as someone else, due to their gender or race, is purposeful discrimination.

And, since most raises are percentage based, the wage gap just keeps increasing as people’s careers move on. And, as I bet most of us have experienced, if not directly, then through a friend or family member, sometimes the only way to get away from being paid poorly is to leave your current employer, and to find somewhere else to work that you feel will pay you fairly.

But then, that company asks for your salary history. They do not intend to offer you less money because you are a woman or person of color, they simply want to offer you the least amount of money they can get away with. But by using a base set by past discriminatory actions, they are perpetuating the discrimination. They are making the discrimination systematic, instead of active. And that is even more insidious, and harder to fight.

Going back to the original article from Liz Ryan, I thought her section on turning it around, what would the potential employee like to know about the employer’s finances was interesting, but it also missed the mark a little bit for me. Sure, I would like to know if my direct manager gets a bonus based on keeping salaries low, but much more relevant to me, as the job seeker, is the salary history of the position I am applying for.

If you want to know what employers have paid me for the last five years, I think you should have to tell me what you have paid this position for the last five years. Because that does let me know how much the employer values this position, and what raises and bonuses have historically looked like in the position.

So yeah, if you want to know my salary history* before you make me an offer, you should be prepared to show me the salary history of the job.

*This is actually a moot point for me. I am a state employee. My salary is officially public knowledge, but you do have to take the time to sift through the documentation to find it.