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Will Amazon’s New Salary Policy Actually Hurt Women?

Jan 25

So, a ton of our HR peers around the country in states like California, Massachusetts, New York City, etc. are trying to figure out new laws that ban hiring managers from asking candidates about their salary history. Forever, this has been commonplace.

It might still be in your workplace, as this isn’t federal law, yet, most managers use the salary history question as a screener to understand if they can ‘afford’ a person, or if they can negotiate and get the company a better deal. There are major problems with this practice, and it’s why many states have put in place laws to remove the practice.

Amazon is one of a growing list of companies that voluntarily decided to stop asking candidates about salary history.

From Quartz:

Amazon has promised to hire at least 100,000 new employees in the US this year. And it won’t ask any of them about their prior job history.

According to a report in Buzzfeed yesterday (Jan. 17), Amazon is pledging to do voluntarily what many companies are now being forced to do by law: bar its US hiring managers from asking job candidates their prior salary.

The policy is an attempt to help correct a gender pay gap that’s perpetuated when starting salaries are based on previously low salaries. On Jan. 1, California became the largest state in the US to institute a law barring the practice, joining Massachusetts, New York City, and other states and cities with similar laws.

While these types of laws are designed to help people who have previously been hurt by these practices (females, individuals with prison records, basically anyone who took a lower than market pay wage for some reason or another), we need to understand for every action we take, Newton’s Third Law comes into play.
This law is no different and leading economists are trying to get us to understand some of these realities that will now be the norm:

But there’s reason to believe the law could backfire, and end up punishing women. That’s because taking information away from employers doesn’t make them stop caring about the information, said Jennifer Doleac, an economist at the University of Virginia.

When employers can’t ask about salary history, they’ll make assumptions based on what they think they know, Doleac said. “When we make them guess, it hurts the best applicants in the groups we’re caring about, because we have no way to distinguish them, and they get grouped together with the rest…

…If women were well paid in their previous jobs, and are offered a lower salary at their new place of work, they’ll be forced to negotiate for the wage they already had, Doleac said. For women who can’t prove they earned more, or are unwilling to haggle, they’ll get less, she said. And low-paid women will be in the same position as they were before the laws were passed.

“We know women don’t negotiate, even when it would be really easy for them to push back,” she said, referring to prior research.  “Putting that extra hoop there for them to jump through is going to hurt.”

Fix one problem, create another that might actually have a negative impact on the ones the law was created to help.

What we should be doing as HR leaders are ensuring when offers are made that they are equitable across the board in our organizations based on objective data. We own that. Managers will make dumb decisions, we know this.
This is why we have jobs in HR. It’s our job to ensure we support those managers with information to make good decisions. Then when they ignore our information to make good decisions, we smack them over the head!
I believe Amazon is doing the right thing. I think what we’ll see long term are these laws will end up benefiting more than they’ll hurt. What do you think?

17 Comment to “Will Amazon’s New Salary Policy Actually Hurt Women?”

  1. Transparency is key. The objective data is essential. Removing any part of that data (the previous salary info) isn’t a good thing and isn’t going to make sexist hiring managers suddenly not be sexist. But over time it may indeed help shift the negotiation needs in the hiring process, requiring more women to develop the ability to ask/demand for what they deserve. That’s when you’ll see real change.

    Chandra Kill
    Feb 5, 2018
  2. Sure, Jasen; as the sole male businessman member of the NCPE for many years (and co-author of their Job Evaluation, A Tool for Pay Equity publication), I have a thick skin. Wuz once excoriated by Bob Greene at a Chicago ACA meeting for exposing flaws in comp practices … like switching the Job Evaluation plans to assure female/minority-dominated jobs were “objectively scored” to pay less than traditionally male WASP jobs. Happened so long ago, Bob forgot it and has been a BFF for decades.

    To your good points: most cited studies are accurate in what they measure but do not support inferences beyond the scope of their input. My friend Howard Risher, PhD, did the stepwise regression study that ID’d every single potential causative factor to end up specifying the 14.3% cut for a woman’s version of the male job. That report was buried and never repeated. The 1960s Equal Pay laws only protect identical work; the tiniest difference has been used to justify massive pay discounts. Canadian labour law is much better for true equity, because it incorporates comparability and proportionality. Congress recognized productive pay equity solutions via a study of many of my pay programs in GAO/GGD-85-57, July 31, 1985, available from either GAO or the Gov Printing Office. Many of my articles in my old Personnel Journal column and in the current CompensationCafe have also covered this topic. This easily misundered topic has been a lifetime focus in my compensation career.

    Let us continue to respect the motives and opinions of others as we share facts. Civil exchanges are important!

    Jan 28, 2018
  3. EJames… Sorry for the extreme snark yesterday, not the best way to have a constructive conversation.

    But we already legislation on the books from the Equal Pay Act of 1963. And the reality is there is no way to to quantify “when all else equal”. There are simply too many variables in the vast majority of roles and people.

    @Gerry, that necessity you speak of is simple supply and demand economics. If you feel you’re not getting the pay you deserve then test the market. Obviously the more skills your possess, they more options available to you.

    Jasen
    Jan 28, 2018
  4. Well that got some response Tim. Here’s my take: https://www.careerxroads.com/2018/01/pay-equity-beyond-compliance-salary-question/. It boils down to the fact that while we shouldn’t have waited to have a legislative ‘push’, we need to move beyond compliance and measure the stakeholders readiness to react to existing Fair and Unfair pay practices that will reward some and punish others. Pay Equity is rapidly becoming a compelling business necessity. Amazon isn’t alone. #Timesup

    Jan 28, 2018
  5. P.S. to Jasen: As a fellow cynic, I know that a call for “fair” treatment always means “I want more!”

    Jan 28, 2018
  6. Means to end practices that have statistically significant negative disparate impact on legally protected classes. I.E.: stop reducing the initial pay offer when the applicant (all else being equal) is a woman. Every employer has a right to its own unique practices, absent such bias. There is no one pay practice proper for every enterprise, despite the false straw man arguments of pay equity opponents; but different rules that penalize only protected classes tend to be bogus. See case law.

    Jan 27, 2018
  7. Well heck. I suppose 50 whole years of experience surely trumps 50 peer reviewed studies that span decades. And of course you’re smarter than those Georgetown PhD types that conduct then and us simpletons that are easily duped, since you’re able to better translates statistics that”really” go into such studies.

    Or perhaps you are victim to confirmation bias and you “interpret” what you want based on your personal feelings despite evidence to the contrary.

    Jasen
    Jan 27, 2018
  8. GIGO is more relevant than SJW, here. Am actually complimented to be so “insulted”, even tho I had to look up the acronym. After over half a century doing HR, job evaluation and advanced comp research, I know how easily wool can be pulled over eyes by “respected sources” whose studies’ underlying data relies on fuzzy matches and imprecise metrics. Systemic discrimination continues. People unwilling to drill down into casual claims are free to believe what they wish, but facts exist independent of opinions.

    Jan 27, 2018
  9. Well EJames, I certainly don’t have any published articles to point to that I’ve written to try and prove my expertise. But the sloppy subjective article you think I refer to was a report by the US Department of Labor report that examined over 50 peer reviewed articles/studies.

    In the scientific world, peer reviewed studies would highly suggest these are not sloppy much less subjective articles.

    But hey, you SJWs keep fighting the good fight and keep finding emotionally satisfying causes to take up. Regardless of the actual facts.

    Jasen
    Jan 27, 2018
  10. Apologies to Tim, but stunned by Jasen’s intransigence despite decades of objective (NOT subjective/sloppy) research. See my July 2010 Workspan article. Sure, 77 cents is a easily quibbled loosey-goosey BLS occupational category pay block comparison, but the American Comp. Assoc. study proved 14.3% must be subtracted to predict the salaries of women with PRECISELY the same KSAs, titles, industry, years on the job, etc. Guys would notice a 14% lag, as do women. Times are changing! Long overdue.

    Jan 27, 2018
  11. Honestly, I cannot believe how many people I perceive as smart are still perpetuating this idea of a gender pay gap. The exact same report that almost everyone quotes about women earning 77cents on the dollar compared to men only compares all men to all women, regardless of their experience, roles, responsibilities, etc.

    However….and this is also in the report but almost NEVER mentioned, when you compare men to women in similar roles and years of experience, the difference is almost negligible and what little differences exists, are all by choice. It also states that before starting a family women out earn men in many STEM fields, but often reduce their hours after starting a family.

    THERE IS NO GENDER BASED WAGE GAP.

    jasen
    Jan 26, 2018
  12. Ouch, Tim! Saying you agree is just as bad. Of course, everyone has an opinion … and I could be wrong. …. Naw.

    Jan 26, 2018
    • Jim,

      This is my exact quote – “I believe Amazon is doing the right thing” – by not asking salary information. So, I’m not sure what you’re saying.

      Tim

      Jan 26, 2018
  13. The speculative suggestion that female applicants would suffer if their past salaries were not disclosed is one of the most illogical ideas I’ve heard in over 50 years in this business. Levelling the playing field is long overdue. In addition, women DO negotiate, too. Sexist assumptions like that don’t belong in HR, compensation or TA. Any assessment system that can’t measure KSA quality without a cheat sheet is bogus!

    Jan 26, 2018
    • Jim,

      To be clear, this assumption came from a female Economist, not me. I put it out there because it’s worth discussion, as I think most people, including myself, would have the similar thoughts in what ways are best to help female candidates and not assume one way, is right over another.

      T

      Jan 26, 2018
    • EJames…. What is meant by “leveling the playing field”?

      As a cynic, when I hear that phrase it usually signifies some socialist idealogy or government mandated social engineering.

      Jasen
      Jan 27, 2018
  14. I’m sure HayGroup, PayScale, et al are staffing up their sales force. Probably one of the biggest contributing factors to this issue is the understaffed or under-supported HR functions out there that have a hard time illustrating and convincing management when there’s such a problem. I’m fortunate to be part of a firm that understands and embraces sensible compensation practices and easily sees the connection between fair compensation and organizational success.

    Warner Coffman
    Jan 25, 2018

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