No, your previous pay is not always indicative of your ability. Many employers simply cannot afford to pay market rate, and it isn't unheard of for people to take a hit in pay for passion projects, getting exploited because they want a chance to prove themselves, etc.

There are myriad reasons people aren't getting compensated properly, and I've only mentioned the benign reasons. Also, many employers are more apt to pay a new hire more money than give a proper raise to a long time employee. Even though this doesn't make sense, it is... common practice.

I think one of the biggest factors that people often underappreciate is the average savings and debt of someone who is 25-40 years old.

Often times people literally cannot afford to not work. This makes the first 3-5 years of someone's career kinda hit or miss, maybe they got lucky and one of their first offers was good, maybe they got unlucky and it was bad, but that initial NEED to start earning anything approaching reasonable income is more important to many people than the desire to hold out for a better job. They quite literally cannot afford to not accept one of the first legitimate offers they receive.

Then you get into a system where everyone wants to know what you make and only pay you 10% more than current, and some people end up way lower on the pay scale for a much longer time than they should.

On the flip side - it's hard to make money as a web consulting firm if you aren't under-paying a few or more of your workers.

Yep see palantir

These are all good points, but you could say similar things about pretty much any other hiring criteria, other than maybe having directly worked with someone and knowing that they are good. No one is saying that it should be heavily weighted, but that it's not irrational to have your offer depend to a small part on previous comp level. Remember, you somehow have to translate mainly interview performance and a bunch of words on a piece of paper into how much you want to pay someone. This is not an exact science and past comp is definitely a piece of information you want to at least take into account, even in a perfect world you're trying to pay people what they deserve, not what they'd be happy with.

Obviously these could be factors but these are usually temporary and if you know you're significantly underpaid, you can always go get multiple offers to force employers to go as high as they will go. I've been on the job market three times, including the most recent search and each time I had multiple offers. And probably could've had more if I tried harder.

Even then, the market is not entirely unfair - those with a lower salary will find it easier to find jobs that pay better and get raises. Those who are overpaid are more likely to stagnate in terms of compensation. Obviously nothing is perfect but this is true of practically all other information you're using to judge candidates.

You can always call the previous employers and ask how painful it was for somdemonstrated.e?
I know everyone I've worked for would gladly tell you that person was an utter jerk if applicable.

I was the highest paid person at a previous job. They underpaid me and they knew it, but I cannot responsibility tell a potential employer that making more wasn't possible because the company was running in the red.

Other examples include talking to a woman. If she knew women got paid less across the board but rather not go through law suits, how does that come across?

Yes, fine, ask for compensation history, but don't ask questions about why. It always gets spun into a positive, but I'd posit that it seldom is a positive reason. If you determine said person is worth the money, i don't see why you wouldn't pay it unless you really plan to readjust, with back pay, the real value they demonstrated.

I know people are always hoping for unicorns, but never forget why they are so pretty.

As far as previous salary is concerned, I pretty much agree with candybar for direct hires. If you are in it for the long term adjustments to salary can and do happen. For contracting, you just set your rate and what you made previously is irrelevant.

Based on what though? Any other information you're using is just as faulty. This guy's career looks like it stagnated, but maybe he took care of sick parents for years while also working a full-time job. This other guy doesn't seem to have any technologies that are relevant, but maybe he'd be an amazing learner and it's because of his strong character that he chose the technologies that are right for the business, not the ones that would further his career. Another candidate may seem really knowledgeable during the interview but maybe he just lucked out by getting the exact questions that he'd prepared for. No one knows how much someone is worth, which is why a lot of different pieces of information are used for estimation. And the offer is for the most part a point-in-time thing - if they think you're much better, they can always give you a raise. A pay cut is much harder to stomach, which is why even the best employers tend to make conservative offers that they think are just enough to get you to switch jobs.

Also adverse selction and winner's curse are real things - if you're not careful, you end up with overpaid employees that are hard to cut because they are good, just not worth what they are paid.

The employer is not obligated to make everything completely fair for everyone. Do you think overpaid employees who have not performed to their expectations should voluntarily return some of the money they earned? You don't have to be there if you think you're being underpaid. There are literally millions of employers in this country - you're not obligated to work for any particular one. They are not obligated to pay you the maximum that they are willing to pay, just as you're not obligated to ask for the least that you're willing to work for. I'm far from a free market fundamentalist but there is such a thing as a market and you don't have to accept any deal that you think is unfair for you. At some point, it's up to you to correct any pricing discrepancies.

What does all of that have to do with salary history?

I've had to supply references, coding tests, and links to my github. If that's not enough for you to hire me, then so be it, but attempting to use my previous salaries to pay me 10% below your minimum standard compensation is a bit ****ty, and I think that is what everyone is getting at.

You're just speculating here about how the information is used. Also, your anger is entirely misplaced - if you're being paid 50K at company A, you should not be upset at company B for offering 70K for a position that typically pays 90K because your current salary is low. You should be far more upset at company A for paying you 50K when your market value is at least 70K. Company B may be offering you less money than what they are offering others, but they are still offering you more than company A.

You don't have to care about what others are getting paid - they are not you and their market value is not your market value. There's no such thing as minimum standard compensation in general - if there was a minimum for a given level, they wouldn't be going below that. If they are going below something, that something is not a minimum by definition.

It should concern you far more that your current company is paying you far less than your market value, despite having a far better idea of your actual worth than market. It's strange to me that a lot of people feel helpless about how much they are currently getting paid by people who know exactly what they are capable of, while being indignant about other people who are offering more money despite having far less of an idea of what they can do.

This seems related to this tendency for people to be more comfortable making less, as long as their coworkers are making even less. But they are not your competitors and you're generally better off at places that pay everyone well, even if you're relatively worse off.

Ok this part definitely does not make sense imo.

You can't simultaneously be upset that company A is underpaying you, and not be upset that company B is attempting to underpay you. You literally used the exact same amount of money they are trying to underpay you.

If company Z had been paying you 30k for a 50k job before company A, you now shouldn't be upset at company A in your example.

This is the heart of the issue to me. In this rationalization, it is impossible to assign blame to any actor, because they are all less-guilty when compared to the actor that came before them. In order to fix a system such as this, you need to determine it is broken and break the chain.

I understand that the data point exists that someone was willing to pay this person that amount, so therefore they have essentially a value to someone. But I do not trust other people to be able to come up with good salaries for people, that is usually one of the reasons (the biggest one) that they are interested in leaving. The employee either sees their current or future potential shrinking in the current position, which is a complex subject that no one but the person really has the vision for, and which no one actually knows will happen.

^ this 100%

candybar i feel like you're able to give 2 examples that show the same thing but somehow draw conflicting conclusions.

fwiw i've always given my salary, but that's because i'm at a junior level and i'll play whatever game's necessary.

however once you get to senior level, where you have plenty of work exp for the employer to base hiring decision on, giving compensation benefits them much more than you. so you should definitely avoid it if you can. past work exp and the ability to communicate it is a much better signal than past compensation.

asking the $$ question is standard; doesn't mean it's a good question, and sure as hell doesn't mean you should feel happy answering it.

But they are not underpaying you. Your value is not determined by what they are willing to pay someone else. Nor is it determined by the maximum someone is willing to pay if you are able to demonstrate that you have better alternatives. No one is forced to bid against themselves. An offer of 70K demonstrates that you were being underpaid @ 50K - someone else at the same company in a similar position getting paid 90K doesn't. Again, you can be upset at whatever you want, but it makes little sense for your anger to be primarily directed at someone offering to pay you 70K while you're completely okay with someone currently paying 50K.

I don't either but you're also not the only potential destination for your candidates - for them to pick you, no one else has to be offering a better package (obviously this can be more complicated because it's not just the money). For you to hire someone, you already have to be offering them more than what other companies are and you don't want to bid against yourself. You also have to figure that your candidate is not a total idiot and is generally aware of her market value. There's simply no real reason to offer someone much more than they are willing to accept because even if you want to be a generous employer and satisfaction and retention matter, you're better off starting with a lower expectation and giving larger raises. And if the only reason why someone is not accepting your offer is because they have a better offer or they are making too much, they will let you know.

Salary information also roughly serves the same purpose as title - because titles are so randomly inflated and often useless when you're comparing positions across companies, salary is far more indicative of actual seniority and level of responsibilities than titles.

I'm lucky to work at a place that I think treats compensation in a very fair way, but I definitely think this obsession with salary isn't healthy. Because of the nature of market rate you're always comparing yourself to others and exposing yourself to lots of destructive things like envy, greed, and condescension.

I recently went through this and I just got more and more negative until I had an especially busy week and didn't have time to give it any thought. I'm going to strive to be thankful, continue trying to improve myself, and take advantage of the opportunities I have rather than wondering if I make 5k less than one of my co-workers and stewing on just how much that sucks.

As you go further along in your career, you need to spend more time making sure that your salaries are not unusually low for your level than worrying about how to dodge questions about your compensation so that your unusually low salaries are not exposed. Either way, for my last job search (the one before this current one I've been talking about), I was able to get 3 offers that were all approximately double my then total comp from 3 companies who were all aware of my comp level. So I don't really buy the premise here at all - if you are able to demonstrate that you're valued by others (even if it's not the current company), your current salary is generally not a sticking point. And you can always jump multiple times.

Man, this bizarro world where two identical people doing the same work at a company have a 30% disparity in salary or whatever and the lower guy isn't underpaid, or the upper guy isn't overpaid, you can't just assign labels to things, man!

Great post!

Seriously how much you make doesn't matter that much and I can assure most of you that someone lowballing you because your previous salary was low does not matter at all if you're on the right track and end up at a company with even any semblance of decent management. Personally speaking, I'm taking an extremely large paycut (the difference alone would be a pretty good salary for most people in the US) to accept an offer (and lesser of the two offers by a similarly large amount) so I'm just generally super-confused about people thinking little games like this is how you maximize your long-term success. I mean, how am I going to cope, aren't I just stuck at this much lower salary since every future employer will use it as the baseline?

I don't know too much about other areas of work but in software development, no two people do the same work and certainly not the same amount of work at the same level of quality. I mean you could argue that distinguished engineers at Google do the same work as junior software engineers so it's ridiculous for the former to make 20 times or whatever it is they make more than junior engineers.

What's usually going on is that those people have the same title and don't make the exact same amount of money. But at no company I've worked at is it expected that the same title meant the exact same level - it's just a tier/band at best and usually not designed to be comprehensive or meaningful across departments/roles.

Also from an economic perspective, fair market pay is not determined solely by your ability to produce for your current employer. It's quite possible for two equally productive employees to have different fair market value. For example, two basketball players may be equally valuable to a given team, given their scheme/personnel or whatever, but the player whose value is less dependent on the scheme and can be just as good elsewhere would get paid more than the player whose value would not translate as well.

I understand what you are saying, but I'm absolutely not trying to condone obsessing over it. I am personally paid highly in equity and much lower than I could be in salary.

I'm trying to discern the truth about what makes a good and fair hiring practice.

I genuinely think a huge amount of hiring practices are really really bad, and it is arguably the most important thing for every single company ever created.

Not apeculating at all. It was, and still is, very difficult to justify why I want to earn more than previous employers paid me, despite the fact that said jobs have no relevance to my current searches.

More relevant, my db work paid less than paltry ETL work, and I'm put on the spot on why I'd do the work for little pay.

At no time was it ever beneficial for me to answer much I got paid. Thankfully, I'm seldom asked.

If someone is willing to program an uber clone for $5 / hour, it makes perfect sense for a lowly web designer to earn $2 / hour. Yes, co-workers and others in the industry are a signal to market value, and this is precisely why it is illegal for employers to ban pay discussions between employees.

This is entirely irrelevant. People are at low paying jobs for many reasons, and yes, many very tough jobs pay Walmart wages without benefits, but some jobs happen to be better resume builders. It isn't exactly hard to overwork and underpay people who are struggling to break into better jobs. The fact they took something instead of living on welfare shouldn't be held against them.

Unhappy workers tend to take a lot of sick days and have doctor appointments every week. I honestly never met a person who was okay being underpaid but happy to be earning more than others, but I'll take your word for it. I have met people who are underpaid but very happy at their jobs despite being able to earn more elsewhere, but their motives go well beyond pay.

Someone call 911, suzzer has had a stroke.

My first language was Perl. I will always have a soft spot for it (and bastard offspring like PHP).

Curious if my previous work was just poker for a number of years how to answer previous compensation?

Before poker I was working as a software engineer, and now I am looking to start working in software again soon.

Unfortunately we don't have any fun PHP + node type side projects yet.

This is another reason it is a bad thing to ask. It is bigoted against untraditional workers.