Salary history bans are laws or policies that prohibit employers from asking job applicants about their past salaries during the hiring process. These bans aim to reduce wage inequality and eliminate the perpetuation of pay disparities, especially those based on gender, race, or other biases.
A recent IZA paper by Bo Cowgill, Amanda Agan and Laura Katherine Gee examines the impact of salary history bans on job seekers and employers in the United States. Specifically, the authors investigate whether the success of these bans is undermined when job candidates voluntarily disclose their previous salaries, even when not prompted by employers.
The key findings reveal that a significant proportion of workers (28%) disclose their salary histories unprompted, despite bans preventing employers from asking. An additional 47% would disclose their salaries if they believe other candidates are doing so. This behavior is more prevalent among men, who are 12 percentage points more likely than women to disclose their salaries without being asked. This creates a situation where the stigma of silence pressures all candidates to disclose, undermining the intended effects of the bans.
The study suggests that voluntary disclosure is driven by well-paid candidates who have incentives to share their salary history to signal their value to potential employers. However, this also means that non-disclosing candidates might be perceived as having lower salaries, which could negatively impact their job prospects.
The policy implication of these findings is that salary history bans may not fully achieve their goal of promoting pay equity. Instead, the pressure to disclose voluntarily could perpetuate existing pay inequalities, like the gender wage gap. Therefore, the authors call on policymakers to consider additional measures to ensure that salary history bans effectively reduce pay disparities without being circumvented by voluntary disclosures.