While researchers have debated the underlying causes
of the gender wage gap for decades, recently it has
attracted mainstream political attention. With that
attention, cities and states have begun to experiment
with “Salary History Bans” (SHB).
Salary history bans (SHBs) prohibit employers from
inquiring about a candidates former or current
compensation.
Applicants may volunteer, without prompting, their own
salary history. However, even if salary history is voluntarily
provided, employers may not use this information alone to
determine a workers’ salary. Most SHBs also require
employers to provide a salary range at the request of the
applicant. In some cases, after an offer has been extended,
employers may seek the applicant’s compensation history.
Each SHB adopting entity has publicly stated that they
have adopted the SHB to promote pay equality.
Given the complex issues factoring into the gender
earnings gap, its unclear whether a blunt policy like a SHB
would be effective in reducing the gender wage gap, or
affecting salaries at all. In the simplest of labor market
models, perfect competition, workers are paid according to
the marginal revenue product, and past salary does not
factor into this at all. However, it could be that absent
full-information, salary history sends strong signals about
productivity.