“The most you should expect is an increase in pay of 25%. That’s the max and it’s pretty standard.” said a headhunter to a woman looking to leave a company that was notorious for underpaying their employees. An increase of 25% would not even get her to what she should have been making at her current job. Accepting a new job at 25% increase would keep her pay far under the current going rate for her next job.
As the headhunter explained, “you can’t expect your new employer to pay for the sins of your former employer.” No one was asking this yet it seems to be a common rallying call. How is paying the current market rate for a job an extra burden to an employer? It is not.
Yet, she was not asking for the new employer to go back in time a la the Delorean with a flux capacitor in Back to the Future and pay her the 30% under market she was making for 3 years. That money was lost. Somehow, though getting pay at the current going rate for a job would be a penalty for the new employer since the standard is to add 10% – 25% of a person’s previous pay regardless of where it lands you in the market.
This is the embedded discrimination that lives under the guise of a hiring best practice. Once a person accepts a job for low pay whether discriminatory or not that person is forever punished. I argue that the continuation of under payment is a form of discrimination. Luckily, I don’t have to make this argument on my own. The courts agree. Specifically in the Glen v. General Motors (11th Circuit) ruling the court found that previous pay is not a legitimate business reason to have pay disparity.
According to data from the US Dept. of Labor, women and people of color make less than white men. Women working full-time typically earn 23% less than men working full-time. African American men typically are paid 22% less than white men. Latino men typically make 28% less than white men. The maximum of 25% increase for changing jobs in all cases keep these demographics from earning the market value of the new job.
As a new employer you may couch it as not paying for the sins of former employers but by using past pay and limiting future pay to a certain percentage increase then you, the new employers, are actually piling on to the sins of former employers.