What’s a Job Candidate Worth? Pay-Setting and Gender Inequality after the “Salary History Ban”

• In Event: 3240 - The Economic Sociology of Inequality

Abstract

Despite extensive research on the causes of gender pay inequality, we lack evidence about one process at the heart of the problem: how employers set pay for new hires. State and local governments have taken up this issue, recently outlawing the practice of basing pay on the job candidate’s past salary. Policymakers hope these “salary history bans” will prevent women from getting locked into lifetime trajectories of lower pay. This paper examines the effects of this legal change on firm practices and identifies cultural schemas that structure pay-setting, enabling the persistence of the gender pay inequality. Drawing on in-depth interviews with 60 human resources practitioners and experts, I document pay-setting practices—activities that were previously obscured by firms’ notorious secrecy around pay—and cultural ideas that justify pay outcomes as legitimate. I then describe variation in organizations’ responses to the salary history ban and assess the implications of these new practices for gender pay equity.

Author

• Laura Adler, Harvard University