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Let’s Talk About The Millennial Wage Gap: Salary History Bans Won’t Just Help Women

Lowell, Massachusetts.

CREDIT: Flickr user Lei Han.

Last summer, when the class of 2015—the most indebted class yet—graduated from college, the youth unemployment rate hovered between 11 and 12 percent, and 21-year-old Katie was trying to find a job. Since graduating that spring, she had sent her resumé to dozens of places, hoping, finally, that everything would fall into place. She wrangled through the interview process at multiple organizations and eventually found one that seemed promising. The organization, concurring, offered her a position—but not before asking what her previous salary was.

Like many students fresh out of college, Katie, whose name has been changed, had never worked a salaried job before. So, when they asked, she provided an hourly wage from one of the part-time jobs she held in college: $12 an hour. Though she didn’t know it at the time, this tiny data point from her past would come to define her future: how much she could afford to pay for rent, how much she could save for retirement, how much she could put away for her dreams to go back to school. The organization, without disclosing it to Katie, used her previous earnings to determine the new salary they’d offer her.

Katie never considered not revealing her salary history—she didn’t know she could.

By late summer, as the humid August air turned into the crisp, biting winds of September, Katie accepted the job, and the salary, too.

Across the country, it’s common for employers ask would-be employees about their salary histories, often using the answers to reduce their offers. But in Massachusetts, come July 1, 2018, employers will no longer be legally allowed to ask prospective employees about their salary histories until after an offer with compensation is made. The bipartisan provision, passed unanimously by the Massachusetts Senate and House and signed into law by Republican Governor Charlie Baker last week, is part of a broader package of legislation targeting the gender wage gap which leaves, on average, full-time, year-round working women making 79 cents for every dollar a man makes. But because the effort tackles wage gaps broadly, and because Millennials suffer from their own kind of wage gap as a result of entering the labor market during one of the worst recessions in history, young people may also soon seen a bump in their paychecks.

Wage gaps, whether for women, people of color, or any group making artificially low wages as Millennials do, only tend to worsen over time, perpetuating inequality. This is why legislation like Massachusetts’ new salary history ban, which aims to prevent wage inequality from widening, is so important. Here’s how it works—and why it’ll work for Millennials, too:

In today’s economy, there are two primary ways to increase your pay: you can either get a raise at your current company, or you can switch employers and hope for a higher salary at the new job. These methods increase your pay, but they also increase inequality: by basing changes in pay off of previous salaries, it’s harder for people who start off with artificially low wages—that is, wages that don’t reflect the true value of a job’s worth—to catch up. Over time, those inequities add up, widening the wage gap.

Let’s start with raises. Say a man and a woman are doing the same job but, thanks to societal mores that devalue women in the workplace, the woman makes $39,500 a year while the man makes $50,000 a year—a $10,500 gap. Both the man and the woman are good at their jobs, and, come evaluation time, receive a 3 percent raise. That the raise is percentage-based, as the vast amount of raises are, is key. While the man’s 3 percent raise translates to an additional $1,500 per year, the woman’s raise—of equal percentage—only nets her an extra $1,185 per year. Now the woman is making $40,685 while the man is making $51,500, and the discrepancy between their pay has jumped to $10,815. Even though they both received the same percentage raise, their pay gap has just increased by $315. The wage gap, without intervention, grows on its own—even if the factors belying it have not.

Percentage-based salaries are the first way the wage gap worsens, and while Massachusetts’ new law doesn’t address them, it does address an equally pernicious source of inequality: asking about salary history. Like percentage-based raises, asking would-be employees about their salary history ties their new salary to their past salary, thereby perpetuating the wage gap. This method of hoarding wealth among certain groups would not prove nearly as potent, however, if not for a dramatic, relatively recent shift in the way the labor market works.

While it wasn’t uncommon for members of our parents’ generation to stay at one company for their entire working life, today we change employers much more frequently—and those jumps are often the largest sources of our pay increases. But when we make those jumps, if would-be employers ask us about our salary history, they’re essentially relegating our future pay to our past salaries. For women, this can mean continuing to earn 79 cents for every $1 a man makes, for black women, it means making 60 cents for every $1 made by white men, and for Latina women, it means making just 55 cents for every $1 white men make.

Massachusetts’ new law takes aim at this very gap, instituting a ban on employers inquiring about salary histories until after an offer with compensation is made. Though the ban is the first of its kind, advocates in other states—namely, California and Maryland—have tried to implement similar measures and may soon try again. And if they do, it’s not just women and people of color who will benefit: more money in the pockets of workers means more spending, and more spending is good for the overall health of the economy.

In Massachusetts, the legislation contains a host of other provisions aimed at curtailing the gender wage gap, including a section promoting pay transparency in the workplace (for example, leaked emails from Sony revealing a pay discrepancy between Jennifer Lawrence and her “American Hustle” male co-stars are what prompted Lawrence to speak out about the gender wage gap in Hollywood), and a section banning pregnancy (or parental leave) as a reason for a demotion in seniority. But for all that’s been said of the salary history ban as it pertains to women, little attention has been given to how the Millennial wage gap might fare.

Millennials, the largest, most diverse, most educated generation in history, are also one of the most financially insecure. More Millennials live in poverty than members of previous generations did at the same age, our generation faces staggering amounts of student debt and owes twice as much in student loans as the average graduate did in the early 1990s, and our wages have fallen or stayed flat, bringing our real median income down by thousands of dollars compared to the same age group in previous decades.

While articles and pundits alike decry Millennials’ alleged lazy and entitled job attitudes, the source of our economic woes dates, at least in part, to the 2008 recession, an economic crisis created by the generations before us, the same ones condemning us today. As luck would have it, we came of employment age during the height of one of the most dire economic forecasts in recent history. Just as many of us were graduating from college and planning to enter the labor market, the economy took a nosedive—its worst in decades. As the supply of jobs dwindled, demand skyrocketed and wages plummeted. As a result, Millennials’ job prospects looked slim, and their paychecks, when they existed, even slimmer.

Today, we’re still paying the price. When we’re given percentage-based raises, those raises are hundreds, if not thousands, of dollars less than they should be, had we not come of employment age during a recession. And when we’re asked for our salary history while competing for a new job, we’re forced to provide numbers that are far lower than they would have been, if not for the recession. We’re still grappling with our own generational wage gap, which has nothing to do with laziness or apathy, and everything to do with the circumstances under which we entered the workforce.

These circumstances continue to define the contours of our futures—what homes we can or cannot afford; how we might provide for our children—even though we lay no more claim to their cause as does a woman for systemic sexism or a person of color for institutional racism. But Millennials, like women and people of color, deserve a brighter future, one defined not by the oversights of others, but by the virtue of ourselves. The new salary ban could help Millennials from the rolling Berkshire Mountains of Western Massachusetts to the cobblestone streets of Boston realize this future. Young people — across all 50 states — deserve the same.

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