What happens if the employer asks up front what you earned in your last job?

I have a client who, in an initial phone interview, was asked what he earned in his last job. He countered with the question about expected salary for the position. The interviewer (the hiring manager) replied with "I asked you first" followed by silence.

In the 2001 edition of his book "Negotiating Your Salary - How to Make $1000 a Minute," Jack Chapman proposes 3 ways to handle early (pre-offer) questions about past remuneration or future salary expectations:

Least Effective: Cave in and reveal your salary history or requirements.
If, you take this approach, he recommends you discuss your salary expectations and not your history. In order to do this, you will have to have done your homework on salary range in advance (which should always be the case anyway).

Better: Answer with "fair market value" and probe for their budgeted range.

Best: Stick to your principles and attempt to postpone the discussion.
Jack offers a number of suggestions on how you might go about doing this.

I highly recommend the book as another great resource for preparing for compensation and other job-related negotiations.