If specifically asked "What is your current salary?" you would typically respond with the actual current salary, not your ideal new salary.
They're basically using it as a means to sanity check and calibrate their own assessment.
My next job paid me $90,000 CAD a year. (Investment bank)
My next job paid me $160,000 USD a year. (Google)
All numbers are all-in comp. All junior dev roles.
Should the bank, and Google have offered me $33,000 and $40,000, so that the new salary isn't too much higher then the old one? Would that satisfy your notion of fairness? When new grads hired by the latter are getting paid $150,000/year?
You are hired to do your new job, not the old one. What the old one paid has no relevance.
In other words: If you don't know what you're worth, of course they won't give you what you're worth.
From where does this expectation derive, and what makes it a good barometer of sanity? On the face it just sounds like the same rationale used for basing raises on percentage of an employee's initial salary. "3% over your last job" is not fair.
Based on experience, almost nobody negotiates their offers, and if you see people talking about their job moves, people are often excited about, say, a 10% increase.
That's why employers expect to be able to get away with anchoring it to your current salary.
For instance, I think the worst bonus I've ever received with my current employer is 15%. Best was 30% or so.
That's not salary. But it's fairly reliable. With the new employer the bonus might not be reliable even if it's comparable percentage-wise. Every company has different criteria they use to fund the bonus pool and it's unheard of for a potential employer to ever disclose that. Everyone at my current employer gets paid out of the same bonus pool as the CEO so I know we're getting paid :-)
Also, equity (at least in my case) plays a huge role. The last few years I've made as much or more in selling vested stock options as I did in salary.
So if someone were to ask me what my current salary is in a employment negotiation I would tell them that I don't think it's relevant and give them a few examples why. I would however, tell them what I thought I was worth and justify it by explaining what value I could bring AND-OR I would tell them what salary range I've already been offered elsewhere recently and ask if they were prepared to make an offer in that range. If they insisted my current salary, I pretty much know that's not the right place for me.
BTW, if specifically asked 'what is your current salary?' I would typically respond with 'my ideal new salary is $X'
