Considering Compensation and Disabilities: A Summary of Current Research

Julie Zhu & Diana R. Sanchez

The U.S. Census Bureau from 2017 shows that the median annual salary for disabled employees is almost $6000 less than salaries for employees without disabilities. Pay inequities and other parts of the compensation process, such as pay negotiations, have been largely ignored in research pertaining to disabled workers. Disability research to date has largely focused on selection decisions, recognition, and supervisor perceptions. In response to this research gap on the compensation of disabled employees, Speach and colleagues (2023) designed three studies to understand pay differences for job candidates with disabilities. This article will first summarize the three studies (Speach et al., 2023) and then explain the practical implications of this research.

The studies summarized here are rooted in the expectancy violation theory along with common stereotypes toward people with disabilities. Expectancy violation theory outlines how people react to counter-stereotypical behaviors. Disability-related stereotypes, such as the perception of low competence, are used in the studies to demonstrate the ramifications of stigmatization toward individuals with disabilities.

Study 1: Initial Salary Rates

The first study examined initial salary rates offered to job applicants with a disability status and compared those to the initial salary rates offered to job applicants without a disability. Participants were 500 working adults recruited from Prolific who were asked to assume the role of a hiring manager and review application information for a fictitious job candidate. They were randomly assigned a candidate from one of five disability statuses: general disability, autism, hearing impairment, wheelchair use, and a control group. Participants were provided with information about the job task for the position (i.e., office clerk), the average salary for the position (i.e., $33,000), and qualitative comments that indicated the fictitious job candidate’s disability status. For the last step, the participants were asked to offer the job candidate a starting salary between $29,000 and $37,000. Results indicated that job applicants with a disability status were offered a statistically similar initial salary to those without a disability.

Study 1 provides evidence that the difference in compensation between employees with disability status and those without is likely not rooted within the initial salary offering stage of the compensation process. Although this demonstrates that the job applicant’s disability status does not affect hiring managers’ initial salary offering, it remains a question whether this finding is consistent throughout the compensation process. Hence, follow-up studies were conducted to further investigate the next stage of the compensation process: negotiation.

Study 2: Rate Negotiations

Study 2 examined whether job candidates with a disability status negotiated a lower final salary than those without a disability. This stems from past findings that suggest stigmatized individuals tend to internalize social expectations and conform to their stereotypes to avoid negative reactions (i.e., the backlash effect), which in turn impacts the efforts they exert in achieving goals, in this context, the final negotiated salary. To test this, two groups, 122 participants with a disability and 170 participants without a disability, were recruited from Prolific and assigned the role of a job candidate. Participants then negotiated their final compensation with a computer over a maximum of six rounds, which they believed was with a real person. The results of this study showed that participants with a disability negotiated lower final salaries than those without. Furthermore, this relationship was found to be influenced by participants’ perceptions of how society viewed those with disabilities. Specifically, participants negotiated lower final salaries when they perceived higher disability-related stereotypes.

Study 2 reveals two meaningful results, first, the compensation difference between individuals with and without a disability appears to begin in the negotiation process, and second, job applicants’ perceived disability discrimination and self-stigma seem to play an important role in mediating this difference. Aligning with the theoretical ground of this study, the findings here echo attention to the job applicant’s awareness and experience of the negotiation process. For example, organizations can play an active role in mediating self-stigma and stereotypes for those with disabilities in the negotiation step.

Study 3: Hiring Manager Perspectives

In Study 3, the perspective and influence of the hiring manager in the negotiation process were explored. The study first investigated whether job applicants with a disability were offered a lower negotiated salary than those without. Second, to integrate the expectancy violation theory, the study examined whether job applicants’ perceived likability was influenced by their disability status following a negotiation. Furthermore, expanding on the expectancy violation theory, the authors examined whether perceived negotiation likelihood played a role in the job candidate’s disability status and the final negotiated salary. Applying a similar procedure as Study 2, the 1,266 participants recruited from Qualtrics were assigned the role of a hiring manager and were instructed to negotiate a final salary offer with the job applicant, who had one of the five conditions. Overall, results showed that hiring managers are more likely to offer lower negotiated salaries to job applicants with a disability than those without, and this relationship was mediated by the hiring manager’s expectation of how likely the job applicants will engage in negotiation. A notable mention is that no significant difference in the final negotiated salary was found in the wheelchair-use condition. Furthermore, there was no effect found in the perceived likability of the job applicants based on their disability status.

With Study 2 and Study 3 examining both parties’ perspectives in the negotiation process, the results reflect disadvantageous circumstances faced by job applicants with disabilities. As negotiation begins, those with disabilities encounter the challenge of being influenced by their perception of how society views them. The higher their perception of discrimination, the lower their final negotiated salary. In addition, if job applicants with disabilities engage in salary negotiation, they face the risk of contradicting hiring managers’ biases, resulting in lower final negotiated salaries. Given these findings, some practical implications based on perspectives from both job applicants and hiring managers are discussed in the section below. 

Practical Implications

The first study indicates that the salary disparity between job applicants with and without a disability persists beyond the initial salary proposal. This suggests that the issue is likely not confined to the early stages of the compensation process but is ingrained in the subsequent phase. This research warrants further evidence and scrutiny. Findings of the second study underscore the significance of disability status during the negotiation process, illuminating a salary gap of 5–9% for individuals with disabilities. This difference poses potential long-term economic consequences for employees with disabilities, particularly when compounded by higher perceptions of discrimination from the job applicants. The study highlights the negotiation process as a potentially crucial stage where the salary gap begins to widen, emphasizing a need to encourage job candidates with disabilities to actively engage in negotiations and to alleviate the apprehensions that individuals with disabilities may have about negotiation. This can be achieved through organizational actions such as revising materials and training hiring managers to promote equity and inclusion in the compensation process. Organizations can position themselves in a more active role toward combating salary disparities by bringing awareness to some biases hiring managers commonly hold for job applicants and quantifying their impacts (e.g., lost in revenue through salaries, bonuses, retirement, wages). Simultaneously, organizations are also encouraged to promote fair and equitable salary negotiations internally, as revealed by Study 3. It emphasized the importance of motivating hiring managers to adopt unbiased negotiation practices, as hiring managers were found to offer lower final salaries for job applicants with disabilities. An example of promoting unbiased practices may be incentivizing fair negotiations using workplace rewards, conducting policy analyses to identify effective strategies for countering challenges faced by both job candidates and employees with disabilities, or reevaluating the compensation process by surveying current employee experiences.

Conclusion

Overall, the studies presented here found that job applicants with a disability negotiated lower compensation than those without, and their perceptions of disability discrimination moderated this relationship. Furthermore, the studies’ findings demonstrated that hiring managers tend to offer lower negotiated salaries partly because the act of negotiation with job applicants with disabilities was counterintuitive for them.

As one of the first papers to examine disability and compensation, Speach and colleagues (2023) provide valuable insights into the salary negotiation process. The theoretical framework and social phenomenon of these studies highlight the repercussions of social stereotypes toward job applicants with disabilities and how they translate into long-term economic disparities. To mediate this inequality, organizations can make profound impacts by addressing it from the perspectives of both the hiring manager and job applicants. As a collective, organizations can promote awareness of fair negotiations among hiring managers and job applicants, incentivize unbiased practices through workplace rewards, conduct policy analyses, and proactively assess and improve compensation processes.

You can find further details on the summarized studies here:

Speach, M. E. P., Badura, K. L., & Blum, T. C. (2023). Everything is negotiable, but not for everyone: The role of disability in compensation. Journal of Applied Psychology, 108(4), 571–594. https://doi.org/10.1037/apl0001039