Managers Are Less Likely to Hire People Who Ask About Salary. Will NYC’s New Wage Law Help?

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Brigid Bergen: It's the Brian Lehrer show on WNYC. Welcome back, everybody. I'm Brigid Bergen from the WNYC and Gothamist newsroom. When you're applying for a new job, one of the obvious considerations is salary, but as a prospective employee, salary ranges are often hidden, and even asking about pay structure and benefits can count as a knock against you.

One study found that 23% of hiring managers are less likely to hire an employee who asks about salary, making assumptions that they're selfish and won't be a good team player. What are some ways to solve for this sort of hiring bias? For starters, how about making salaries public? That's the idea behind New York's new wage transparency law, which will take effect in about a month.

Starting on March 15th, New York City employers with four or more employees must list salary ranges as part of a job posting. Here with me to talk about the new law and potential barriers facing interviewees are Teresa Ghilarducci, Professor of Economics and Director of the Schwartz Center for Economic Policy Analysis at The New School, and Rellie Derfler-Rozin, Associate Professor of Management and Organization at the University of Maryland's Robert H Smith School of Business.

Professor Derfler-Rozin, I want to start with you. You authored a study that found that when job applicants ask about salary, hiring managers display something called motivation purity bias, what is that? While you're at it, can you explain the difference between intrinsic and extrinsic motivation because they come up a lot in your study too?

Rellie Derfler-Rozin: Yes, of course, and thank you for having me here. First, you have to explain the difference between these kinds of motivations. Intrinsic motivation is motivation about the task itself. Being excited to do everything that is about the task itself, the learning, and so forth, while extrinsic motivation at the workplace is motivation around things that are around the tasks. Things that come with doing my job, like my salary, my benefits, the flexibility, location, and so forth.

What we find in this study, which we call motivation purity bias is that despite very robust evidence that intrinsic motivation and extrinsic motivation are actually positively correlated within individuals, and more importantly, extrinsic motivation actually works in synergy to strengthen-- together with intrinsic motivation to make motivation and performance better.

Despite very rigorous scientific evidence, hiring managers usually fall prey to what we name the motivation purity bias. They expect job candidates to show pure intrinsic motivation, only to show that they're interested in the job itself. When a job candidate asks about other features of the job that are extrinsic in nature, and we also emphasize that we don't talk about asking for more, but just basically getting information or signaling that they're happy with what the company's offering, immediately in the hiring manager's head this is a signal that probably they are less intrinsically motivated, which then leads to about 20% lower likelihood of them actually hiring this candidate.

Again, we call it bias because it deviates from what we actually know happening in reality. We also theorize that this is probably due to this fact that people have more simplistic views about how other people behave and think. When I think about myself, I'm aware that I'm a complex person, so I may love my job, so I do love doing my research and teaching, but I also appreciate the extrinsic features of my job, the flexibility that comes with academia and so forth, and it's okay to feel this way. It's okay to have this complexity, but when I think about another person, I will tend to think in a more zero-sum either-or, so, "Oh, so they're actually interested in other things of the job. They're probably not that interested in the job itself."

Brigid Bergen: We all know that people take jobs to get paid, so why is this extrinsic motivation viewed as something negative? What's the psychology of that? Do people really think that asking about money makes you worse at your job? Is there any actual evidence of that?

Rellie Derfler-Rozin: Yes, exactly like you're saying, this is why it is so puzzling. Actually, we talk of the paper, we start with a real example of a person who was interviewed for a job and she passed the first interview, and as she was going to the second one she only wanted to ask about what are the salaries? What is the salary, what are the benefits? She actually got a response that her questions signal that she's not intrinsically-- they even used this word, intrinsically motivated, and they're not going to continue with the second interview.

Luckily for her, at this point, the CEO intervened and she got an apology after she, again, publicized the story. Again, this is why it's so puzzling because, like you were saying, there isn't actually-- The evidence is showing very robustly, there have been many analyses, including meta-analyses, which is looking at different papers' findings showing that actually extrinsic motivation, and when you give those extrinsic features, when you incentivize people, when it's coming on top of intrinsic, it actually enhances both motivation and performance for the long term.

However, this is not how we tend to think. This is how the psychology here again is this simplistic view of other people's motivation and thinking it's a either-or, and to some extent, we also talk about it in the paper. It's also about the industry or the practice not catching up with what research shows, because part of this comes for there have been studies in the '70s that many people heard about talking about motivation crowding out effect.

People came to the lab and they were doing something for fun. Then, for some of them, there was an incentive introduced the second day, and then on the third day, they removed the extrinsic, the money that was paid for them. They did show that intrinsic motivation on the third day after money has been removed, self-reported intrinsic motivation reduced.

Again, this was in the lab other than like you were saying, we do jobs also to earn for our living. Even those original researchers actually updated and said, "In fact, when it is other motivation that is more autonomous when people do it because they needed it, because it fits their other goals in life, it actually will work in synergy with intrinsic motivation, but it seemed like the overall intuition of people and hiring managers did not update like we would've wanted based on the new research.

Brigid Bergen: I think your study also found that this hiring bias affected women with childcare responsibilities and low-income individuals more than other groups. Can you just talk a little bit about that?

Rellie Derfler-Rozin: We did an empirically show this finding, we do talk about this in the paper as a very important implication of our findings. Again, we don't have evidence for this. We didn't explore it yet, but we do theorize that it is probably the case that-- and also, by the way, anecdotally, I'm teaching negotiation for the last 10 years, and I do have very frequently female MBA students who want to know, for example, about maternity leave policies, which is perfectly right, but they are afraid to ask because it might signal something and it's not being publicized.

We do theorize about how people who are either coming from a lower socio-economic status or for which they're more financially vulnerable, they might actually be more inclined to just ask about those things and rightfully so inadvertently might be penalized or discriminated against. The same like you were saying with women, women who do, in most cases, still bear the main caring for the kids, especially in early childhood or infancy, they might be more interested in those extrinsic features of the job, like flexibility or maternity leave policies, they might ask for this more and as a result, be penalized.

Brigid Bergen: Professor Ghilarducci, before we get into New York's law, anything you want to add?

Teresa Ghilarducci: Yes, I'm a professor of economics as well and I was very impressed about how the professor explained very complex study, well done.

Rellie Derfler-Rozin: Oh, Thank you.

Teresa Ghilarducci: Well, very, very well.

Rellie Derfler-Rozin: Thank you, I appreciate.

Teresa Ghilarducci: What I got out of it is that this is really focused on employers. Employers have an outdated bias for candidates that talk about what she calls the intrinsic or the parts of the job that are passionate and interesting for the candidate. That her research shows that employers are skittish or move away from candidates when they ask about pay, and that the research shows that that's wrong on the part of employers. That employers should get up today and realize that people work for all sorts of different reasons, and being paid for being passionate is the happy formula, and that you really have a very productive worker if you pay them for doing their work passionately. Is that a good summary of your work?

Rellie Derfler-Rozin: Yes. Thank you so much.

Teresa Ghilarducci: My research shows, and I think all of us knows on common sense, is that there really is a gender effect here. Is that if a male candidate asks about salary, the research shows that the employer will think, "Here's a man who's responsible for his family and himself, and this is a self-affirming and strong negotiating tactic. I'm going to add that to a list of positive characteristics that they care about the job and care about their standing in the world, and this is just a good package," but a woman would be seen as less interested.

This is always the example used to explain why parking lot attendants are paid more than childcare workers, and the explanation goes something like this, "Women just are naturally good with children and they will sacrifice pay to be with them." Going to the pay transparency law in New York that will be in effect later on this spring, and all the other pay transparency laws that have been passed around the country, the issue has been how this is going to close the gender gap, and the theory--

Brigid Bergen: Let me just jump-- Oh, I'm sorry. Let me-- You finish that thought and then I want to get our listeners into this.

Teresa Ghilarducci: The theory is, is that women especially are penalized for not knowing what the salary is and are especially penalized for asking about it.

Brigid Bergen: Thank you so much for that. Listeners, we do want to hear from you. Are you a hiring manager or someone who conducts interviews? How do you approach the question of salary in interviews, and have you ever been turned off by an applicant who asks about money too early in the hiring process? What signal did it send to you about their motivation or work ethic? The number is 212-433-9692.

Or are you someone who has recently gone through the interview process as an applicant? When did you bring up money? How did you do it? How did the person conducting the interview respond? Maybe you have a question about how to talk about money in interviews. Our guests can handle those too. The number, 212-433-9692.

I also want to bring in New York City's new law, which will make listing wages mandatory. Have you ever gotten a job and later found out that your coworker was making way more than you? What did you do? 212-433-9692. New York City employers, how do you feel about having to post salary ranges? What challenges might this bring up? 212-433-9692.

We're talking about wage transparency with my two guests, professors Teresa Ghilarducci, Professor of Economics and Director of the Schwartz Center for Economic Policy Analysis at the New School, and Rellie Derfler-Rozin, Associate Professor of Management and Organization at the University of Maryland's Robert H Smith School of Business.

Before we go to our callers, I want to bring in one caller, former council member, Helen Rosenthal, who was the author of the City's Wage Transparency Bill. Good morning, former council member. How are you?

Helen Rosenthal: Good, good. I'm so glad you're covering this issue, Brigid. It's incredibly important for all the reasons that your guests have stated.

Brigid Bergen: Can you talk just briefly about the genesis of this bill?

Helen Rosenthal: Of course, I had my own experience where when I first started working for the City over 30 years ago, my male counterpart with the same title who happened to start right around the same time that I did, he and I were having a nice chat, getting to know each other. He told me his salary, I told him mine and noticed that his was $5,000 more than mine. He sheepishly said, "I said to them that I was about to start a family and so I needed the additional funding."

It's always been on my mind to do a lot about this, but of course, experts in the field like Beth Newfield from PowHer New York and others were just terrific in helping it all come together.

Brigid Bergen: Thank you so much for chiming in this conversation about where the bill started. Professor Ghilarducci, can you talk about what the bill does in terms of what it requires of New York employers?

Teresa Ghilarducci: Yes. I think your listeners would just love the description because we've all been in situations where we walk into the perfect job, but we will walk away from the perfect job if it doesn't pay enough. This law will require employers in New York City who are employing people who have more than four employees to post a range of salaries that the job would pay. It has to be the language is reasonable, which means it has to be true.

All of us, or I've been hiring people more than I've been looking for jobs, and there is a range depending upon the person's ability to grow in the job. If they're new, I want to start them at the lower end. I've been in situations where it's been a public employment and that range is already posted and known to both of us, and that makes a conversation a lot easier.

When I'm in a situation like I am now or it's a private university, I could be a little cagier. My caginess and my secrecy will be eliminated by New York law, and I welcome that because my competitors also will have to be as straightforward as me. It requires employers with at least four employees in New York City, including independent contractors, to post a salary range. It does not apply to temporary positions advertised by temp agencies.

Brigid Bergen: Sorry about that. I'm having a one little technical moment. I want to invite some of our callers to join this conversation. Amy in Glen Ridge. Amy, welcome to WNYC. Do you have a question for our professors?

Amy: Hi. I just wanted to make a comment that I had spent over eight months looking for a job, both in New Jersey and New York City, and finding that frustration with negotiating the salary. I'm a divorced single mom, so obviously, that's something important to me. The place where I've ended up accepting a position where I am now is out of my sector. It's actually in the nonprofit in New Jersey and they were upfront right away about the salary. It was maybe a little bit lower than-- Hello?

Teresa Ghilarducci: I'm saying that's good, that's really amazing. I didn't mean to interrupt you.

Brigid Bergen: Oop, Amy, you are still there? Sorry, Amy, go ahead. You can finish your story. Oh, maybe we-- Amy, are you there? Amy, go ahead.

Amy: This is Amy.

Brigid Bergen: Okay, Amy. Sorry. I think the professor was praising you for that detail, but go ahead and finish your story.

Amy: Oh, no, that was it. It just made the process much easier to navigate that everyone from the beginning was on the same page. I was so appreciative, especially because it was in a nonprofit and a lower salary than what I was looking at for corporate jobs. It was definitely-- got the elephant out of the way.

Teresa Ghilarducci: Research shows that a big part of the relationship between employer and employee is trust, and having that salary up front actually helps the candidate and the interviewer develop that trust immediately. It also happens in unionized settings or as I said in public employment, is that elephant is out of the room. I suspect that those situations it's a lot better initial relationship.

What happens also is in this pay transparent situation, is that almost always the worker or the groups of workers who have less choice in the labor market, and these are women and non-white workers who may face discrimination or have difficulty moving from employer to employer, almost always are paid less for the same job within an employment.

It's that initial pay gap that happens because of pay transparency just gets magnified once person are on the job. You can have equally qualified people working side by side for decades, where the woman or the non-white worker is being paid a lot less. This was shown in a very dramatic way in the Lilly Ledbetter case.

This is a woman who worked at a Goodyear Tire plant for 20 years. She only knew that she was paid less when she went to go retire and her pension was based on a far less base than her equally qualified counterparts who are men who worked in the same job. She had a Supreme Court case and then was overturned because she had surpassed the statute of limitation and then there was a law that said that these pay gaps can't stand.

There is a well-known theory in economics called monopsony which predicts that in situations with pay transparency, the people who need to work, who have less bargaining power, who have less practice in bargaining will always be paid less for the same job.

Brigid Bergen: Let's go to Brenda from Pompano Beach, Florida. Brenda, welcome to WNYC.

Brenda: Thank you. Thank you for taking my call and thank you for this conversation. Before I share my own personal experience with salary increase, I wanted to just confirm Amy's call. My experience with not-for-profits including higher-ed and government is that all of the jobs are posted within the parameters of the bandwidth of salary. It's full transparency. They have been doing that in my professional experience of 20, 30, 40, whatever it's been.

The salary question itself about asking about money means you don't actually care about the job. My own experience, I was very young. It was one of my first-- I think it was my first full-time job in my chosen career. I was called in to my boss and the boss of all bosses, and I didn't understand what they were saying about me taking on new responsibilities. They never framed it as, "This is a new job," so when I asked, "Is this a new job? Are we speaking about a salary increase?" I was fired on the spot and told never ever ask about salary in the workplace.

To this day, and this was decades ago, multiple decades ago. To this day, I'm still left scratching my head saying, "Well, if you're not discussing salary in the workplace, where are you discussing it?" I'm not here because I'm here, that is the point of work. I've never forgotten it. Again, this is a very long time ago, so I thank you for this conversation.

Brigid Bergen: Brenda, thank you so much for your call. Professor Rozin, I'm wondering what your reaction is to Brenda's story?

Rellie Derfler-Rozin: I think probably things like this happen a lot, which is very unfortunate, and like you discussed before, there is this also gender issue here. When men ask for this, they are being perceived as, "We are the breadwinners, we need this." There is actually also maybe something else to add to the conversation. One of the reasons that women and non-white applicants actually are being paid less is that they are less likely to actually even ask for more or negotiate. This creates this trajectory for the future.

There is also research showing how when women, in fact, negotiate on behalf of others, so they're being agents to help other people as opposed to themselves, they actually can be better negotiators than men because then they don't feel that they are breaking the stereotype of a woman needs to be a warm person, negotiation which should be something in a way competitive which, again, is also unfortunate myth that we have about negotiation. Instead of thinking about it as a win-win problem solving, we think about it as something very aggressive and competitive.

In fact, there is research showing that and there is a professor at Stanford, Margaret Neale, who talks about how in order to help women to be more inclined to negotiate, in their head they should feel, "Yes, I'm actually negotiating on behalf of my kids, on behalf of other people that I care for. If I'm asking for more money because now I have more job responsibilities, it's because I actually need to use some of this money to care for my kids or maybe to outsource some things I'm doing at home, so I can actually take on more of this work."

There is nothing wrong with that. It is fair, and this is what we should be doing, but we need to also be more confident about this. Now, of course, as you're saying, we should-- and I talk with my students all the time, we don't talk about money while we're still just interviewing. We try to not talk about it at this point. Once we know that we're the one that are going to be offered a job, this is where our negotiation power goes up and this is where we should definitely advocate for ourselves.

Brigid Bergen: Chad in Brooklyn. Chad, welcome to WNYC. I understand you're a recruiter.

Chad: Yes, I am. Thank you for having me and I'm definitely taking in a lot of conversation that is being had on this topic. I think I offer a little bit different perspective just because I guess I would operate in the middle ground between prospective employees and the employers. Generally working in the design industry, a lot of times dealing with the conversations around salary and potential pay, things can sometimes be a bit murky for the candidate side or a prospective employee, and hopefully trying to provide insight on those numbers is what I like to do early on, so that way it kind of sets the tone for their search, so that they know, "Okay, is this the right opportunity to pursue?"

That way generally down the line once they're in that conversation stage of potential offer, they already have the tools to really organize themselves to make a strong push on a particular competitor salary. I think I'm generally dealing with a lot of minority candidates most recently and women candidates within the design world, I hope I'm a good advocate on that front to making sure that they get strong salary considerations when it comes to offer stages.

Brigid Bergen: Chad, thanks so much for your call. Professor Ghilarducci, I want to go back to New York City's law for a moment in terms of what it requires of New York employers. When they list these salary ranges which you said need to be accurate in good faith, are there penalties for employers who don't comply with this, and who's responsible for enforcing that?

Teresa Ghilarducci: The agency that's responsible for enforcing discrimination is also enforcing age, race, gender, and sexual preference discrimination. The New York Commission on Human Rights is authorized to implement this law and to impose civil penalties for not complying. Since the law is new, that procedure hasn't been established yet. We have until May 15th.

I don't think there's going to be a lot of resistance because this should be a relief to employers in one way because all the competitors will have to do it and so you having to be cagey about it or sneaky about it or play that in negotiations, it will just be a lot more refreshing. Like your first caller said, the non-profit, just put it on the table, and then it was just a lot more relaxing.

However, employers will lose something. They will lose the ability to tell the candidate, "Hey, don't tell others what we're paying you because you're really being paid the most of anybody else." That kind of lie has happened for decades and decades all across the globe. When workers find out that they were lied to by chatting like the former council member did, chatting with their coworkers, all hell can break loose.

This happened in universities when assistant professors were told by their deans not to tell anybody what they were paid and they finally did over a beer. The women or the non-white found out they were being paid a lot less, they formed unions. It happened with the University of Michigan. Then the university is required then to bring up the salaries of people in the bottom.

There is research to show that when pay transparency gets revealed, that there is a lot of dissatisfaction even among the people who get pay increases because the inequities had been closed.

You asked me about the law. The technical part is that there will be penalties for not posting the reasonable salary on your job announcement. Most employers will probably do it because it will be a big relief, but employers will then have to probably bring up the pay of the people that they usually pay less.

Brigid Bergen: One final question for you Professor Derfler-Rozin. Do you have a sense of whether New York's law will address some of the issues of hiring bias that you found in your study?

Rellie Derfler-Rozin: Yes, I definitely hope that. When we wrote the paper, we did talk about the implication both at the individual level of we're always trying not to actually talk about this while you're interviewing at least so you don't get penalized, and we talked about trying to change hiring managers' views and trying to celebrate people who are actually high on both extrinsic and intrinsic motivation to change this mindset, but we also know that changing a mindset is difficult.

We know that it's very hard to overcome biases. Being just aware of the bias usually does not get it away. This is why I was so excited to see that there is actually now this policy implication. Instead of fighting this bias, let's actually do it as a policy change, let's make employers publish this range so then we don't fall prey to this bias, so then those job candidates do not have to ask and be penalized for asking.

Now, of course, I would hope and I hope this is just the start, I hope because, again, this is talking just about salary, which of course is important, and usually one of the most important factors in terms of extrinsic motivation, of course, there are other important factors at work, that's why people take the jobs. I would hope that eventually there will be even more transparency about other benefits, about maternity leave policies.

This is something, again, that I'm hearing a lot from my students. They want to know more about this, it's not actually very easily to get this information, they are hesitant to ask about this. Sometimes I advise them to actually ask this through the HR rather than the direct hiring manager, or try to find it through their networks. I wish there will be, in the future, even more transparency about everything that is a whole package of extrinsic motivation, rather than just about salary.

Brigid Bergen: We're going to have to leave it there. There's, I know, a lot more we could talk about on this subject. I want to thank you both Teresa Ghilarducci, Professor of Economics and Director of the Schwartz Center for Economic Policy Analysis at the New School, and Rellie Derfler-Rozin, Associate Professor of Management and Organization at the University of Maryland's Robert H Smith School of Business. Thank you so much for coming on.

Teresa Ghilarducci: Thank you.

Rellie Derfler-Rozin: Thank you so much for having me.

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