Part of the reason that women traditionally earn less than men for the same job is that they don’t negotiate their salary as often. Keep in mind too, that often the best way to increase your salary is to change jobs and negotiate for a higher pay.
On the bright side, the hobo lifestyle jives with my minimalist tendencies.
My rule of thumb is to always negotiate. What’s the worst that can happen? Your potential employers say no, revokes the job offer, your significant other leaves you in disgust, your children disown you out of shame, you lose your home due to poverty and you find yourself in fingerless gloves warming your hands over a trashcan fire, listening to a man without teeth rant about the government.
The upside though is that you may squeeze a few thousand dollars out of your future employer. Weighing those outcomes against each other, I can’t understand why everyone doesn’t negotiate!
Nobody cares about your money more than you do and no employer is going to bid against themselves. Most of the time, or at least some of the time, the salary offer initially on the table is only the starting point. Isn’t the possibility worth the request? The worst outcome that will arise, my joking paragraph above aside, is that your potential future employer says no and you have to re-evaluate. And if there *is* a negative repercussion from merely asking for more money, that tells you a lot about how the employer values their employees and is a good lesson on bullet dodging.
Logistics
So how do you negotiate? Speak confidently and know your worth. Intelligently discuss your request with data and numbers to back up your position. Before law school, I worked in the insurance industry. In negotiations for a new job, I sent the recruiter the email below, asking for more money. I dug through my Gmail account to find this, so it really is the actual email (stupid typo and all) with key details redacted.
Hi [Recruiter],
I crunched all the numbers this weekend, and although it’s a very tempting offer, I will have to decline if the salary isn’t raised. I’ve only been working for 3 years, but every year, I get extremely high reviews and large raises, so I know I’m making pretty good money right now. My exact salary is $53,100 after my review about a month ago. They match 7% of the 401k at $0.85/dollar. For the first year at [potential employer], I would make:
[Potential Employer]: $55,000 – $90/month for insurance = $53,920.
Whereas, if I stayed at [Current Employer] that year, it would be:
[Current Employer]: $53,100 + $3159.45 (matched 401k) – $108.00 for medical, vision, dental insurance = $56,151.45.
I also have to take into account the discount I get on my car insurance from working here. On the 3 cars my parents and I own, it’s discounted nearly $800. Plus, I get 2 days off per month at [Current Employer], whereas I would only get 1 at [Potential Employer]. The $3159.45 from my 401k grows at (very conservative estimate) 4% per year. I’m only 23*, so that is a good chunk of change in 40 years.
I was very impressed w/the company and the people seem very nice, but I can’t take a step down in my career pay-wise at this point. If the offer is upped to $60,000, I will take it. I understand that is a significant jump and they will be unlikely to offer that much, but I can’t justify taking walking away from [Current Employer] for any less.
Kind Regards,
[Thriftygal]
That email worked and I did receive an increased offer. I don’t remember how much it was exactly, but I know it was at least close to the full amount if not the full amount.
The second time I remember negotiating was when my law firm asked if I wanted to move to Sydney. My initial reaction was, “Yes! Holy Crap, yes! When do I leave?” They offered me a cost of living adjustment and I gaped in delight and again my initial reaction was, “Yes! Holy Crap, yes! When do I leave?”
But I resisted that impulse, kept my mouth shut and ran more numbers. I couldn’t find the actual email I sent because I used my work email account that no longer exists, but here is my best attempt at a dramatic re-creation.
Yo yo yo HR lady,
I am so thrilled about the offer and the prospect of moving to Sydney, but I’m having a bit of trouble reconciling the numbers. The cost of living in Chicago is amazingly affordable, so while I understand that the cost of living adjustment proposed would be a wonderful deal for someone in the NY office to move to Sydney, it’s sadly not great for me. I calculated the cost of rent and the fact that I would have to buy all new appliances in Australia. Including airfare home to visit my family and the higher tax amounts I would have to pay, moving there would be a terrible financial decision.
Have you checked the exchange rate lately? The Australian dollar is very strong right now and it’s nearly on par with the U.S. dollar. I’m hoping there is some wiggle room here and you can consider my request.
I don’t remember how much I asked for, but I know that email DID net me an increased cost of living adjustment and a one-time moving allowance in my first paycheck in Sydney to offset the cost of new appliances. Woooooot!
Freeeeeeedom!
It doesn’t hurt to ask! Also, it always helps if you’re prepared to walk away. The most valuable thing money can buy is freedom from worrying about money. If you’re not living paycheck to paycheck and are master of your cash, you have a LOT more room to negotiate. You won’t feel obligated to take the first offer that comes along. You’ll know your worth and your potential future employer will also understand your worth.
I was fully prepared to stay at my current insurance job during the first negotiation I described above because I was already considering law school. I was also fully prepared to move to Sydney for a LOT less money than I received for the firm job, but they didn’t know that.
Caveats
I would make such a good giraffe. I’d be the first one to know it’s raining and I’d be all like “Hey guys, it’s raining.”
I know I wrote earlier in this post that my rule of thumb was to always negotiate because I like grand pronouncements, but the truth is a bit more complicated. I only stayed at the second insurance company job for a couple of months because I unexpectedly saw an advertisement for an international flight attendant position in the very town I was living in. I interviewed and when I received an offer, I immediately accepted without a peep.
I didn’t request more money for this position because I just wanted the experience and frankly, I knew my qualifications weren’t up to snuff. The brochure they handed out during the group interview clearly listed the height requirement as at least 5 feet, 2 inches tall (157.5 cm for you metric people out there). As tall as I am in my head, in reality I’m only 4’11” (149 cm) in height. During my one-on-one interview, I took my heels off and mimed loading a bag in the overhead compartment, indicating how long my arms were and thanking the universe when the interviewer seemed appeased.
This may or may not surprise you, but the pay as an air hostess was substantially less than I made in insurance and I never for a second considered saying no because of that. The lure of the adventure made up for the decrease in compensation and I never regretted my choice for a second. Money isn’t everything. Money just gives you the freedom to make your life what you want it to be. And, at that point, I wanted to be a flight attendant.
And although I did end up negotiating for more money to move to Sydney, I did not receive the entire amount I requested. Financially speaking, I would have been better off staying in Chicago. Again, the opportunity outweighed the monetary setback and all that jazz. I was in a strong enough financial position that I could have walked away, but like the flight attendant position, I wanted my life to be global and I had the freedom and flexibility with my money to make it so.
*Yes, if you’re doing the math at home, at that point I was 23 and had been working for three years already, which means I graduated college at 20. I’m technically a genius. I told this to my uncle who indicated that *he* graduated college at 17. The moral of the story is that you shouldn’t compare yourself to others. Unless you’re better than them. That’s the subject of another post though.
In order to be rich, we need
1. very good job 2. save money 3. wise investment
I think you have 2 matches (very good job, save money).
I hope you share your ways to investment someday. I think your blog is unusual.
to invest ← to investment
Sorry.
Like it.
I’m a bloke and have always taken the ‘if you don’t ask, you don’t get’ approach to pay negotiations and always been pretty good at justifying my argument with facts and figures.
Ever since I’ve managed people I’ve said the same thing to them at pay review time; ‘help your boss (me) make his boss’s decision easy’.
I’m a good boss, I will run the numbers and find the evidence to support the raise I think my staff need to be fairly paid, but what’s far more powerful is if someone comes to me to present their own evidence, because then I can play the middleman, shielding the employee from direct confrontation with the paymasters and managing the message both ways to get the best outcome. The other benefit is that then we’re talking about the number they want, not the number I thought they needed (not always the same thing).
Despite having this conversation with people throughout my career in management I can still count on the fingers of one finger the amount of people who have taken my advice, and the fingers of one hand the amount of people who have talked to me about pay at all. This goes for men and women (in fact it was a woman who was the one that did fight her corner).
My advice to people – if you’re not going to fight your own corner then you’re just asking for it to not be fought at all. Don’t give bad managers the chance to underpay you without challenge.
Ha – “The moral of the story is that you shouldn’t compare yourself to others. Unless you’re better than them. ” That made me laugh.
Almost spilt my tea (I’ve given up coffee for lent!).
You seem very bold I couldn’t imagine being so brave to travel as much as you. I wouldn’t even consider living in another country, let alone one half way round the world.
Loving the simplicity you bring with your words, I can almost hear them singing from the page.
Dom
I laughed out loud at the hover text again. Great article! Your writing style is entertaining and refreshing. Great mix of humor with your main point. I negotiated my salary for my current job and for my raise one year later. I was in a position of strength in both cases. There’s just no better place to negotiate from. Yay for faster early retirement =)
The hardest part about not negotiating before getting the job is that it gets harder to negotiate afterwards.
Assuming no true salary increases overtime, a 3% CPI increase is higher on 60K vs. 55K if you didn’t negotiate. Now extrapolate the difference over 5, 10, 20 years and really see the earning potential you’ve left behind by not asking for a hire wage.
I’ve kicked myself for being in situations where I feel negotiation is not an option – desire to leave a shitty job for a job of my dreams.
Well, if you were in SYD your COLA would be breaking the bank now :0
Cheers!
Great article! I apologize in advance if my English isn’t as good as yours (it’s not my native language).
I’ve recently figured out that two things are important to get better salaries.
First one is to be good at what you do and be important to the company (pretty obvious, but most people seem to ignore it);
Second is to NOT NEED that particular job. Whenever I get a job offer, I always tell my current employer about it. I don’t force it into a conversation, instead I use to talk naturally when we are already talking about something related to that company. So they (I have two jobs) know that I can quit whenever I want to.
This approach is good not only to get better salary, but also to get better job condition (less hours worked, por example).
Secret is not to look dependent, even if you are.
One big setback for woman is that they don’t tend to switch jobs that much. Normally the husband does the moving around and gets the big raises. The wife tends to stick with what they have.
I moved a couple of times with the same employer and this really boosted my income. I also climbed the ladder to increase my income. In that time that I climbed the ladder, my wife stayed at the same job. She did move to a new branch but with little to no increase in pay except the normal yearly raise. She has worked hard and got rewarded with decent yearly raises but her unwillingness to negotiate or seek new employment keeps her income down.
When she gets the gumption to job jump, she will see her income make big increases. Unfortunately, I think this is the only way to really make big increases in your income. Employers do their best to get you cheap and then only give small yearly increases. The trap is set from the beginning.
Yes. Use salary surveys. Last month I told my boss, “Hey, I love this job, and I want to stay. But I see in this nationwide salary survey that I’m making X, while my peers are making X+7 to X+30. I’m wondering what I can do to get on par with them.” She is now rewriting my job description for HR so they can justify a higher pay band. . . It’s tough to argue against the data, and its let’s her know that I won’t stick around forever at my current pay.
Thanks for highlighting this important, if not often, uncomfortable topic. One thing I would stress is that there are a lot of non-salary benefits that you can also negotiate for. This can be helpful if your potential employer won’t (or can’t) budge on the salary issue.
I ran into this situation right out of graduate school and ended up negotiating a signing bonus that made up the salary difference I had been requesting along with a mid-year review to re-evaluate my performance (and salary). I was also successful at negotiating the inclusion of some of my graduate research experience (that I did in South America) as part of my work experience, since this was a major factor in the amount of vacation time I was eligible for.
It always surprises how often people forget about these fringe benefits, which can be just as significant as increases in your starting salary!
Great article.
I was a junior lawyer in Sydney and was sent to Seattle in 2002 when the Aussie dollar bought US53c!!! I wasn’t much of a negotiator then but I sent an emergency email asking for an allowance to cover the huge difference in cost of living as it was killing me. They agreed to a generous allowance that was almost as big as my actual salary, but once taking into account the difference in currency just put me on an even keel. The thing I learnt from that is that they were willing to give it, but they wouldn’t have ever thought to offer it unless I asked!
Another time, when I changed from being a Corporate Lawyer to shift to a different field of law, I took a pretty big discount in my pay. It was annoying. It put me behind a bit. But the way I see it, it a) got me the job because it made me a lot more attractive than other candidates who would have asked for more; and b) its better to accept a lower salary in an industry you are trying to get into than it is to pay tuition for a post grad degree intending to use it to get into a particularly industry. A job in the hand is worth two in the bush, or something like that….Anyway, once in the job I’ve managed to get some pay increases that bring me to some degree of parity with equivalent lawyers (in the not-for-profit sector).
”Also, it always helps if you’re prepared to walk away. The most valuable thing money can buy is freedom from worrying about money.”
Absolutely. I’m self-employed and get paid in unit rates. I work at full capacity already, so anytime I talk to prospective clients, they need to pay more than my best rates or else there’s (normally) no reason for me to accept. Having enough money in the bank provides the courage not to worry about them saying “no.” A colleague once told me that the best time to negotiate is when your schedule is 110% full and you have nothing to lose. In salaried position terms, if you’re a success where you are, that’s a great selling point to make more elsewhere.
From my experience, it usually came down to who I reported to. The first time I asked for a raise, I mistakenly said I wasn’t looking to quit, I just wanted to be compensated fairly. Once that director heard I wasn’t willing to quit, she was set on not giving me anything. Her idea of fair was, “well no one else on the team got raises, so you won’t get one either.” I wasn’t looking at my colleagues, I was looking at the market. But since she knew she wasn’t going to lose me, she didn’t care to address my concerns. I even had a write up of everything I did in the last year that really proved I was already working at a much senior level. She didn’t bother to flip the page. By the way, she wasn’t even my boss, she was my boss’s boss. My direct boss didn’t care to try…he just deflected me to his boss. That’s how toxic it was.
But with my most recent experience, I did my research, but what made the difference was I had another offer and was ready to leave if it couldn’t be met in some way that made it more favorable for me to stay. My manager responded within 12 hours. He really cared and understood why we’re all here. I stayed and I’m much happier. The happier we are, the better we work.
Great advice. Getting over the fear of rejection is so difficult that many people end up framing the request from a position of weakness that any dimwitted employer will pick up on, and exploit. Framing from a position of power that you can back up with action (leaving or declining an offer) are very effective methods, no matter the subject of negotiation.
Excellent thorough write up Thriftygal! i recommend you getting a raise just for this article alone! talk to your boss about it and write a follow up detailing how that negotiation went. i’m sure she will come through for you. in my minds eye, i imagined you were model 5′ 9″ tall. good things DO come in small packages.
This is fantastic! I negotiated my salary for a new position at my company and ended up getting surprisingly more than the guy who’d been doing the same job for 3 years. I think negotiation is commonplace and expected in business, so rarely does it hurt to politely ask… And it’s good to have reasons why you deserve it. Also, I too am a “genius” since I started high school at 12 and college at 16! (I didn’t graduate at 20 though. I took a break to work for a while then went back.) 🙂 In any case, I LOVE your blog and sense of humor. “Yo yo yo HR lady” made me laugh out loud.