Salary History Bans and Unravelling

Abstract

New laws such as salary history bans aim to reduce historical inequalities by limiting the information employers can seek. Although employers are forbidden from asking, workers are free to disclose information voluntarily. We study the impact of the ban through the novel lens of unravelling and disclosure theory. Our theoretical framing of these laws shows the importance of the psychological costs of disclosing, and of the coarseness of employer beliefs about gender differences. We then report the results of a large survey of the US workforce that we conducted to address theoretical questions around voluntary disclosure, salary history, and related bans. We find that unravelling is underway in the US job market. A large percentage of workers (28\%) volunteer salary history, even when a ban prevents employers from asking. An additional 47\% will disclose if enough rival job candidates disclose. Between November 2019 and May 2021, unprompted volunteering of salaries increased by about 6-8 percentage points. Men are more likely to volunteer, particularly when they believe that rival candidates are volunteering. Women report higher psychological costs of disclosing, and are more likely to resist unravelling (even as rival candidates disclose). Consistent with disclosure theory, workers act as if silence about their current salary is a negative signal.