business

Should Employers Be Barred From Asking Job Applicants What They Earn?

The effort to ban the “What are you earning?” question is part of a broader movement to make all compensation totally transparent.

Question: I’ve read that several states and cities have passed laws that ban employers from asking job seekers how much they’re now earning. This is supposed to help women who have been earning less than they’re worth move up to full market-level pay. Your thoughts, please.

Answer:

I’ve never asked an applicant how much he or she is now making, which strikes me as irrelevant. So I can understand if applicants courteously demur and ask an employer, “What is the salary range for this job?” In this age-old negotiating game, each party tries hard not to be the first to name a number.

What I prefer to do—toward the end of the initial interview, if I am interested in going further—is ask applicants what they expect or hope to earn in their next position. If their number is much higher than what I believe the position is worth—based on market analysis and what others are earning in similar jobs at our company—I’ll say, “That’s well above our planned salary range. Would you like to remain under consideration?” If their number is well below my target range, I respond that, if we hire them, we can substantially exceed their expectation.

Although I wish employers didn’t ask applicants about current pay, I don’t think the question should be banned, as have questions about race, religion, marital status and others that could be used for discriminatory screening.

It strikes me that the effort to ban the “What are you earning?” question is part of a broader movement to make all compensation totally transparent—and much more uniform. Next, we may see proposed laws requiring employers to state the offered salary in every job posting, or laws requiring disclosure of everyone’s salary to everyone else in the company (some firms already do this).

Such laws would, indeed, level the playing field, but with negative consequences for workplace collegiality, privacy and employer discretion—as well as an employer’s ability (and right) to base pay on differing performance among otherwise similar employees.

Have a money-and-ethics question you’d like answered in this column? Write to editor in chief Knight Kiplinger at ethics@kiplinger.com.

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