Salary history is just one of many questions that can put some candidates at a disadvantage. What are your thoughts on interview and application questions about salary history?
The following is quite specific to hiring technical people.
Salary is about role which is really about what contribution or value could the right person be expected to bring to the company. What a lot of companies and recruiters do is try to find out your previous salary then tack on N% where N is some value they think they can get you in for, not necessarily what they could pay.
This is very common even in the Bay Area. When asked it tells me that the company sees engineering is about cost not value and I don't really want to work in a company that thinks that way.
You'll notice in high tech firms they understand the value of engineering and they pay commensurate with that, in firms that see engineering as nothing more than a cost centre and a high one at that then you'll see lower salaries and bonuses and eventually the non technical execs start to outsource everything because they're driven by cost not value.
As someone who manages teams if you know they're hiring based on cost your teams will likely be underpaid which leads to difficulty hiring because you're competing with companies that pay better. Your team is also likely to be low calibre because like so many things in life you get what you pay for. Low pay leads to nothing but problems which makes outsourcing everything look even better on paper.
It's also important who asks the question. If it's a recruiter I don't much care and would never divulge my salary to them or anyone else. If it's your future boss or his boss asking the question I'd be careful about working there.
It's an unnecessary question that primarily degrades the image of the company doing the interviewing. Personally, it tells me that the company is willing to compromise candidate quality for a few thousand dollars - it is an indicator that the company has its priorities screwed up.
If you're hiring someone, decide on a salary range that you feel is worth the value of the position and negotiate with the candidate to fit into that range. Don't try to get the lowest salary possible for your new hire, it starts the relationship off in a sour position.