The ‘salary question’ fuelling the gender pay gap

When you ask a prospective employee what she currently earns, have you ever thought it might keep her trapped in a cycle of being paid less than her male peers? I didn't...until I read a compelling argument from the Young Women's Trust.

Flexible working and returner programmes are currently in vogue at workplaces across the UK. There's growing consensus that they are important initiatives to tackle the gender pay divide - or to put it more crudely, the sticky issue that women are still paid less than men.

But, there’s one topic that seems to be overlooked in public discourse - despite growing recognition in the States that it’s a serious barrier to pay equality. It’s the commonplace practice of asking job applicants ‘the salary question:’ The dreaded question about how much you’re paid so your prospective employer has a figure on which to base your new salary.

The vicious pay cycle

The Young Women’s Trust believe that the practice is a “surefire way” to keep women trapped in a cycle of lower pay than men. They are calling on employers to stop asking job applicants how much they are earning, and to increase transparency by including salary details in job ads. 

Dr Carole Easton, Chief Executive of the Trust said in a recent press release: “We have to break the cycle that traps women in low pay. Women often start work on a lower salary than men. They then move to a new job and are paid based on their previous wage, as opposed to what they or the role are worth; so they continue to be paid less.

"Ending this practice is crucial to ending the gender pay gap," Easton added.

The Trust argues that the practice especially disadvantages anyone who has taken time out of work to care for children or family members, or has had a period of working part-time.

Truthfully, it never occurred to me that this innocuous question could be fuelling pay inequality. But, when I considered the high value that employers place on salary history as an indicator of worth and fitness to do the job, it seems logical that this practice is helping to perpetuate a cycle of lower pay for women and minorities - who as it's statistically proven, are more likely to be paid less than men.

Disadvantaged from the start

Research shows that the gender pay gap starts from the moment women begin working. Incredibly, young women apprentices earn 8% less than their male counterparts, leaving them more than ￡1,000 a year worse off.

Across all subject areas, five years after completing their degrees, men earn on average ￡2,900 more than women. The gap increases to ￡4,500 for men and women who study architecture or computer science. (DfE statistics taken from the Young Women's Trust).

Action across the pond

The Young Women's Trust believes that the UK could learn a lot from US states that have already banned employers from asking candidates about their previous pay.

In the past year both New York City and California have outlawed the practice, joining 7 other states or cities that have already taken action.

A number of other states are considering banning the practice, (not without resistance). Also, some big corporates – including Bank of America and Amazon – recently decided to get ahead of the law by instructing their interviewers not to ask the salary question, according to the Independent,

Difficult to challenge

Back in the UK a ban is not on the cards and the practice appears to be commonplace. This makes it difficult for individuals to refuse to answer the question without fear of being penalised in the recruitment process.

At the same time, for many women, negotiating a reasonably or significantly higher salary than their previous one can be fraught with difficulties.

“Leave aside the evidence that women may get punished, rather than rewarded, for asking for more money: the specific problem here is asymmetric information,” said Ben Chu in the Independent. “When you disclose your previous salary in an interview situation the prospective employer knows more about you than you do about them, at least as regards their sense of how much filling the position ought to cost.”

Chu argues that the solution may be to compel a company to disclose what it thinks the specific job is worth: “Perhaps what really needs to be proscribed…is the common practice of firms advertising a salary as merely “competitive”, rather than putting a figure, or a rough price band, on it.”

The Young Women's Trust agrees that salary details should be included in job adverts. They argue that it helps to make pay more transparent; making it harder for employers to pay people significantly different amounts for similar roles.

Of course greater transparency poses problems for employers - even those that may wish to be more progressive. Transformation, mergers, acquisitions, poor pay planning in the past - are also reasons that many companies have complex pay architecture.

While I don't believe that the practice of asking the question is at the root of all pay inequality, it does seem to be a key factor at play.

We need to take a long hard look at why we're asking (and answering) the salary question, and have an open debate on its impact.

The views expressed in my blog are personal views, except where otherwise attributed.