The Impact of Paying Based on Worth, Not Salary History

When it comes to discrimination in the workplace, it can be difficult to ferret out root causes. Much of what we see in statistics on the levels of women and minorities on corporate boards, or in executive positions, is the result of long-term systemic discrimination, as opposed to specific actions of individual decision makers. These issues have been going on for a long time; they’re systemic.

For example, in some industries – tech being one that comes quickly to mind – the justification often given for why there aren’t more women in leadership positions is the “pipeline” argument: there aren’t many women at entry level positions in the industry, so there are few candidates to pick from further along in their careers.

But, while this pipeline argument may be used by some to justify the state of the industry, others see it as a clue to potentially help address the disparity: if there are, in fact, fewer women in the early stages of the pipeline, we should take affirmative actions – such as mentorships, scholarships, public relations campaigns, etc. – to encourage more women to enter that pipeline.

Systemic discrimination doesn’t justify current disparities, but may point to solutions to alleviate those disparities.

It’s likely that a similar thought process was behind New York City’s historic decision to prohibit employers from asking job applicants questions about their current or previous salaries during the hiring process. As Sebastien Malo reports in an article covering the new law for Reuters, “Asking about past salaries can perpetuate unequal pay levels rather than allow applicants to seek pay based on their qualifications and earnings potential, [New York] city officials said.”

Women in the United States earn 80 percent of what men earn when both are working full time, according to U.S. Census Bureau data. In New York City, they do slightly better at 87 percent. Still, these disparities put women at an immediate disadvantage when negotiating for a salary with a new employer. A job offer is more likely to come with a higher salary for someone currently earning $100,000 per year than someone with the same qualifications earning $87,000 per year.

New York’s new law is an attempt to remove at least one source of systemic discrimination in the workplace. It’s a step in the right direction.

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