You know the drill. You’ve found the perfect candidate, you’re sitting face-to-face (or given the current coronavirus pandemic, face-to-Zoom) in a final interview and it’s time to ask that question: “What's your current salary?”
Stop right there.
While asking a job applicant about their pay history does give you a wage bargaining advantage, new research has found that in doing so you’re also taking advantage of past inequities and perpetuating wage inequality.
A study in the journal SSRN has revealed that a key reason wage gaps for female and BAME employees have persisted, after accounting for observable differences, is employers using salary histories to bargain over wages.
“Knowing that a job applicant is currently underpaid, employers can offer a bit more than their current pay level, confident that the applicant will accept”, the research says. “But the applicant may still be paid less than they are worth.”
Salary histories enable institutional discrimination. In 2019 on average women were paid around 83p for every £1 men were paid and ethnic minority workers earned 10 per cent less than their white counterparts.
Even though an employer might not individually or intentionally discriminate, asking prospective new hires for their prior wage “appears to perpetuate the effects of past discrimination or other group inequities”.
This can inadvertently undermine the efforts many businesses are making to gain access to a more diverse workforce and to cultivate a more inclusive culture, with all the business benefits that entails.
So to create a more level playing field for female and BAME job applicants and reduce pay gaps, the study calls on employers to stop using wage history when negotiating salary and to include the salary in job advertisements.
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