Monday 7 January 2019 8:12 am

Can we close the gender pay gap by banning questions on salary history?

With only three months to go until the next round of gender pay gap reporting, the pressure is on for many companies to find ways to show improvement on last year’s rather dismal results.

One creative approach to tackling discrimination and closing the gap is currently being put to the test in New York City, in the form of a new human rights law making it illegal to ask about salary history in job interviews.

The theory is that if you are consistently asked what your current salary is, any pay inequality is carried over from role to role. If instead employers discuss the market value for the role, those who took career breaks, switched industries, or may have been undervalued in a previous job get the chance to start afresh.

It’s a bold step – and one that is proving popular elsewhere in the US. Massachusetts and California have recently implemented similar bans.

But though welcomed by some as a step forward, how easy is it to legislate against the biases we all hold?

Working with more than 2,000 candidates returning to work from a career break, we know that prospective employees often struggle when asked the salary question.

Applicants do not want to be penalised for taking time out – they want to be judged in line with the market rate. But only one in five hopes to be paid on return what they were earning before their break, with two thirds anticipating taking a 10 per cent pay cut or more.

We also know that this is a challenge for employers. Hiring managers, particularly male ones, are nervous of asking certain questions, for fear of getting it wrong. Interviewers need to be confident in handling these delicate issues in conversations, not running scared of their HR department.

So does banning another question really help, or could it lead to more awkwardness around salary?

It’s too early to assess the impact of the US rules. But ahead of their implementation, some pointed to negative side effects of similar policies, such as those prohibiting employers from asking about criminal history. Studies have shown that these policies actually result in fewer black and Hispanic men being hired or even interviewed by some employers, due to inbuilt biases.

Then there is the matter of enforcement. Anecdotally, we know that maternity discrimination is rife, yet actual cases are few and far between.

Female candidates already run the risk of being viewed unfavourably if they are pushy about money – whereas this is accepted from their male counterparts. Those often unconscious biases are baked into gender stereotypes which still have an impact.

Many financial institutions currently employ job “bandings”, but these come with their own issues, especially if they are too broad. Women can be offered the lowest level within a band, compared to the top bracket offer for an equivalent male candidate.

A ban on discussing salaries bolsters the idea that employers need to understand that a person’s previous salary is not always a good reflection of their current market worth.

But rather than an unenforceable ban, candidates need access to better information about an employer’s gender and ethnicity pay gap, and appropriate benchmarks across their sector – something made easier in the UK by gender pay reporting requirements.

Nonetheless, research from the Young Women’s Trust reveals that 42 per cent of UK employers admit to not including wage details when advertising roles.

This attitude is worth challenging. The biggest driver of gender pay equality could be greater transparency and information for candidates.

So as the issue attracts more attention over the next three months, we don’t need to look to New York for an answer. Instead, why not encourage companies to disclose exactly what the job is worth? Not only could their gender pay gap figures improve, but they’ll be able to attract higher-value employees who embrace working for a firm that has a progressive outlook.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.