This is always a tough call. If you tell the interviewer that you would prefer to not answer the question, you risk the strong possibility of angering him or her.
I can remember a situation with a friend who absolutely refused to discuss salary history with the interviewer because she felt this was a totally different job and it would be comparing apples and oranges. The next day, she received a letter from the company stating that they were no longer interested in her.
It may be helpful for readers to understand why human resources asks that question. Human resources is charged with recruiting, interviewing, and presenting the top two or three candidates for a job. One of their key customers is the hiring manager. HR has to make sure that when top candidates are presented, that they fit the job specs as closely as possible. To present a candidate to a manager, have the manager take a few hours interviewing and showing the candidate around the department, and then find out that the person is looking for at least $20,000 more than the manager can pay is a total waste of the manager's time. She or he would be very annoyed and rightfully so.
If, on the other hand, the HR person presents the candidate to the hiring manager with the caveat that this individual is asking for $20,000 more than we have allocated but is absolutely terrific and would be worth meeting, then the manager can decide whether he wants to do this or not. Often times, the candidate might not be right for the current job opening but would be perfect for another opportunity that will be available shortly.
I do think there are some things you can say to buffer your past salary history if you know or strongly suspect that the current job does not pay as much as your previous job. Recently laid-off workers who have worked for the same employer for years are often faced with this dilemma, particularly if they are trying to transition into another industry or occupation that does not pay as well as the one they have left.
You might say, ''Well, I'm happy to share what I made on the last job, but please understand that I worked at the company for 13 years and had annual merit and cost-of-living raises. I understand that this job is not at the same salary level, but I am very excited about this opportunity and I understand that I am transitioning into a new field and have to work my way up.''
You do have some options if instead of the question, ''What was your salary at your last job?'' the interviewer asks, ''What salary are you looking for at your next job?'' You can respond by saying, ''I'm very flexible. Why don't we continue to talk and see if this is a good job match first.'' Or, you might say, ''I'm sure you have a salary in mind for this position. Would you share it with me?''
The employer might share that figure, or, might instead say, ''I do have a figure in mind, but I would first like to hear what you are looking for.''
Now, you are trapped. At this point, I think you have to throw a figure out but try to speak in general terms such as in the $40,000 to $50,000 range. That gives you some opportunity to negotiate later. Remember, at this point, the interviewer is merely trying to determine whether you fit into the salary range that has been established by the company. It is much too early for them to extend an offer or for you to negotiate. They are just seeing if you fit into the salary range.