When an employer asks a job applicant, “What are you earning at your current job?” that seemingly innocuous question actually contributes to the wage gaps between men and women, and between black and white workers. Women and black workers in DC earn less than white men, so using someone’s salary at one job to set their pay at a new job serves to lock those gaps in place. That’s why it’s a good thing that DC is considering a bill, the Fair Wage Amendment Act of 2016, to stop employers from asking this question.
This would help decrease wage gaps in DC. Women working full-time are paid just 86 percent of a man’s median wages in DC.[i] The city’s racial pay gap is even more staggering. The median hourly wage for white workers in DC was $33.43 in 2015, compared with just $17.37 for African-American workers.[ii] While this is explained in large part by educational differences, that alone does not explain the racial pay gap.
This is where it can be helpful to ban an employer’s knowledge of a prospective employee’s prior earnings. For example, when starting a new job, a 5 percent pay increase would generally be seen as a relatively large boost. But if a woman taking that position had been underpaid by 15 percent in her previous job, she still would be underpaid by 10 percent in her new position.
An individual’s prior pay does not affect his or her ability to do a particular job, and so it should not factor into the prospective employer’s wage offer to that individual. Instead, the offer should be based on the employee’s particular skill set and how that fits into the company’s existing pay scale and bottom line. For this reason, many jurisdictions are looking to ban employers from asking prospective employees about their earnings history. Massachusetts recently became the first state to do so,[iii] and New York City banned the practice at city agencies.[iv] Similar laws are currently being discussed in Colorado, New York state,[v] New Jersey, and Pennsylvania.[vi]
Such a change can make a big difference. Since adopting this and other practices to reduce the gap, Google has virtually eliminated gender pay gaps at the company. A Senior Vice President at Google recently wrote that “by paying for the role, not the person, you start with a clean slate and mitigate any bias…In other words, you correct the pay bias that exists in society.”[vii]
Because this legislation could go a long way in reducing the city’s racial and gender pay gaps, DCFPI urges the City Council to pass the Fair Wage Amendment Act.
[i] The American Association of University Women. “The Fight for Pay Equity: A Federal Road Map.” September 2016. http://www.aauw.org/files/2016/09/Washington-DC-Pay-Gap-2016.pdf
[ii] Estimates from the Economic Policy Institute based on data from the Current Population Survey.
[iii] The New York Times. “Illegal in Massachusetts: Asking Your Salary in a Job Interview.” August 2, 2016.
[iv] The New York Times. “To Help Close the Wage Gap, de Blasio Tells Agencies to Stop Asking about Applicants’ Past Pay. November 4, 2016.
[v] Time. “How Banning Employers from Asking About Salary History Could Help Close the Wage Gap.” August 11, 2016.
[vi] The Washington Post. “More State, City Lawmakers Say Salary History Requirements Should Be Banned.” November 14, 2016.
[vii] The Washington Post. “How the ‘What’s Your Current Salary?’ Question Hurts the Gender Pay Gap.” April 29, 2016.
