The Rules for Salary History Questions Are Changing — What New Data Means for You

Has a future employer ever asked for your previous salary before they made an offer? New Data from hatch I.T. shows that software engineers are changing the rules. We break the trend down and give you some tips on handling salary history questions.

Why discuss salary history.

Have you ever been asked “what is your current salary?” during a job interview? Or, have you ever filled out an application that required you input previous salaries?

These questions provide valuable information for potential future employers. Once they have your salary history, they have a general answer to questions like:

  • Can they afford to hire you?
  • What is the smallest compensation they can offer you?

It’s in your employers’ interest to know your salary history. It can also save you the trouble of going through an entire interview process only to receive a lowball offer.

Salary history questions can be risky.

For you…

All the same, you probably don’t want to give your future employer the upper hand by revealing your previous salary.
If a potential employer knows your current salary, they’ll probably offer you slightly more. That might cut your opportunity to negotiate a big pay increase. If your current salary is already near their high end, an employer may decide to focus on cheaper candidates.

Revealing your previous salary carries so many risks, so you probably feel uncomfortable when asked for it in a job interview. You don’t want to be rude, but you don’t want to lay your cards on the table, either.
For your future employer…

Salary history questions aren’t just annoying and uncomfortable for interviewees. They’re problematic for employers too. There are three primary reasons some employers shy away from salary history questions:
When employers focus on candidates’ previous salaries, not skillsets and job requirements, they risk imbalances in compensation. That could be unfair or even discriminatory. For example, male software developers average salaries that are 4% higher than women in the same roles.

  1. If you base compensation off of previous salaries, you are likely to end up with the same imbalance.
  2. Employers who ask for salary histories also risk marginalizing candidates from disadvantaged backgrounds. If you pay someone just slightly more than their previous salary, you could be exacerbating a cycle of unfair pay. An applicant’s previous salary doesn’t necessarily reflect her ability.
  3. Employers who only care what you made at your last job can lose talented candidates. When candidates are in high demand, they have a lot of choice in where they go for their next position. They might avoid anything they perceive as a red flag or speed bump in the recruiting process.

Salary history question bans are on the rise.

Salary history questions have benefits and downsides, but sometimes, the downsides clearly outweigh the benefits.
As a result, some businesses, and even state and local governments, have started to ban salary history questions. That’s why our hometown, the DMV metro area, has started to take the issue seriously. Both Washington DC and Montgomery County, MD, have banned salary history questions for certain jobs.
We expect this trend to continue. So far 17 states and 19 localities have banned the practice.[2] Salary history questions will become increasingly uncommon.
An increasing number of applicants don’t provide salary histories.
According to research by hatch I.T., the number of software engineers in the DC Metro area who said they did not provide their salary histories to employers increased from 2016 to 2019.
In 2016, only five percent of job applicants said they did not disclose salary histories to their future employers. In 2017, the number had increased to 1 in 10. In a 2018 hatch I.T. survey of 629 job applicants for software engineering positions, over 1 in 5 said they haven’t disclosed salary histories to their employers.
Based on the high demand for engineering talent in the DC metro area, and the increase in engineers who keep their salary histories private, we expect salary history questions to go out of fashion in the next few years. Companies that don’t remove those questions from their hiring processes may find that the best tech talent is looking elsewhere.
There are tactful ways to dodge salary history questions.
While the trends are changing, you may still encounter the question of salary history. We’ve listed out some tips for navigating this situation.
1. You can provide your salary history. Just accept that this may limit your options for negotiation later. This may be a good option if you expect to receive a similar level of compensation to your current position. If you believe the company can afford your desired salary and know that you are in high demand, sharing your salary may be the right choice.
2. You can respectfully explain that the new role will be different than your last role, so you’d like to keep the conversation focused on what you’ll be doing at your new job. If you believe your background is a strong fit for the position, but that the new role will come with a different set of responsibilities, perks, or challenges, this may be the right option for you.
3. Another option is to explain that you know they already have a budget for the position. You can politely explain that you’d like to start with what they have budgeted for the position and go from there. This can be a good option for positions with a set salary range. If you want the job, but know that the company has a set compensation package for your level, this may be the right option for you.
4. Is there a minimum compensation package you’ll accept, regardless of your previous salary? Courteously explain that there is a baseline compensation range that you’re seeking based on the current market. If you are coming from a strong position, and your desired salary is reasonable, this may be the right response for you.
5. The final option is to delay. Say that you’d like to discuss compensation later, once you’ve learned more about the role. If the salary question has been asked too early, this will give you time to get a better feel for how you want to respond.
Keep in mind that every situation is different, and you should always do your homework in advance. If you know what the pay range is for the position, what you want, and what you’re worth, you’ll have an easier time responding to salary questions.
Always research companies beforehand and know what they typically offer for your position.
Make sure that you know your own value as well. You should have a good understanding of what someone with your background, experience, and skillset can expect to make.
That’s why hatch I.T. is constantly gathering data, and building out the hatchpad, a website where software engineers in the DMV region can search companies and jobs by tech stack and salary range.

This article originally appeared on LinkedIN: https://www.linkedin.com/pulse/new-rules-salary-history-questions-could-add-your-paycheck-winkler/?trackingId=9fePt65nR3WFP86M5VUTRA%3D%3D
[1] [1] https://www.payscale.com/gender-lifetime-earnings-gap
[2] https://www.hrdive.com/news/salary-history-ban-states-list/516662/
Originally published on Medium.

Tags: interviewing, Recruiting, Salary, Salary History Questions, Salary Negotiation, Software Engineering