Compensation Equity – Negotiating is not optional

Numerous studies have shown that a gender pay gap does exist in the US, and it is substantial in certain industries. In 2017, the ratio of median earnings for full-time year-round workers based on the annual Census Bureau report on income and poverty was shown to be 80 cents for women to every dollar men earned (Hegewisch, 2018). Another recent study indicates that the pay gap is even wider (Rose and Harman, 2018). If we focus in on the tech industry, the gap is significantly smaller.  According to Hired.com’s Wage Inequity Report, women were offered 4% less than men for the same job at the same company in 2018, and to date in 2019, they are offered 3% less than men for the same job at the same company. While this is very heartening, the same report finds that in major tech cities like San Francisco, New York, Seattle, and Boston, the average pay gap is higher – between 6% and 9% for women working in similar roles as men. This ‘insignificant’ difference adds up.

Let’s suppose Mary and Joe begin their career at the same time. If Mary starts with a salary of $100,000 and Joe starts with a salary of $106,000, assuming they each work for 25 years and both get a 3% raise each year, Mary will have to work more than a full year longer than Joe to reach the same total compensation. This small example assumed no promotions, bonuses, etc. If those are also included, the gap tends to widen.

So why does this salary discrepancy exist? A little over a decade ago, Babcock and Laschever found that only 7% of women attempted to negotiate their first salary, while 57% of men did. Wow! What a difference. That difference in initial salary as well as subsequent negotiations can add up to over $500,000 during one’s career (Babcock & Laschever, 2007). There are also other reasons, including time off to raise children, etc. But it is this initial salary I want to discuss because this is the situation I see my students grappling with. Using my very small sample of students who have gotten advice from me about their salaries (100s as opposed to 1000s of students), I sense that my male students are more comfortable negotiating a salary than my female students. Because we have a computer science program with a large proportion of female undergraduate students who perform well, I believe that the reasons are less about their education and more about other factors.  As I read through literature on the subject, two ideas have begun resonating with me.  Even though these ideas are based on what I read in the literature, what follows are my opinions.

The first – determining and understanding one’s value. I have found that my female students tend to believe that the salaries they are given are consistent with (or better than) their expectations. In other words, they equate this expectation with their perceived value. If their expectation is satisfied, they are fine with the salary and prefer to take it rather than have a possible confrontation about salary. I think this lower value or expectation is embedded in our culture. Many of my female students come from families in which their fathers are the primary bread winner. If their mothers do have more established careers, those careers are still viewed as secondary to their fathers’ careers. This may lead to a subconscious, implicit lowering of the value of a woman’s work, and an acceptance of a salary that is lower than it should be.

The second reason I believe this discrepancy exists has to do with a desire to avoid conflict and our willingness to accept a “fair” deal. If women are given a fair deal, they tend to be satisfied and feel no need to ask for a higher salary. Negotiating could lead to an uncomfortable situation, so why bother. If men are given a fair deal, many may be satisfied, but they may still want to see if they can get a deal that is even better. They may want to test the waters. This may be because of a combination of having less aversion to risk and enjoying the idea of haggling or bartering.  In the end, it may be less about the final number and more about their interest in going through the negotiation process itself, i.e. playing the game. Again, this is not based on a large-scale empirical study – it is based on my own experiences mentoring students, and yes, I have some students who do not fit this scenario.

But if the female and male students I interact with are the norm and not the exception, and if these are two of the primary issues associated with the discrepancy, how do I help my female students start at an equal level of compensation to their male colleagues? How do I convince my female students who may have been brought up in a different way than their male peers to engage in negotiation and view it as a necessary and “adventurous” part of the hiring process? Here are a few suggestions that have been helpful to some of my recent female graduates. I should mention that I think many of these suggestions are just as useful for my male students.

  1. GATHER SALARY DATA – Don’t just blindly say ‘yes’ to an offer. Thank the company for the offer and even if you feel the offer is perfect, find out what the average salary for that position is in your location. If your salary offer is below the average, let the company know that you are concerned about starting below the average and show them the evidence that others with your same level of experience are making more in similar positions. All the hiring job sites have salary comparison tools. These tools help you determine your market value. If you are a fresh graduate, your value may not be that different from your peers. But if you have more strong internships and/or research experience, highlight them.
  2. TALK TO FRIENDS – Talk to male friends and see what they are getting. I know that people sometimes feel uncomfortable talking to peers about salary. If you are hesitant to do that, go to a professor or the Career Center to talk more about this.
  3. BE YOURSELF – Studies show that there is a social cost for women who initiate a salary negotiation (Bowles, Babcock, & Laii, 2007).  Women may get the salary they want, but they may also be perceived as aggressive. It is important that women be aware of this. At the same time, it is important to help change this perception. While this suggestion may be controversial, I suggest women not attempt to emulate their male peers in the way they ask for salary adjustments. Being assertive may backfire and be interpreted as domineering or aggressive. I understand what I am suggesting is “not equitable”. Men and women should be able to negotiate the same way and get the same outcome. While I hope we get to that point soon, we are not there yet. You were given the offer because of your skill and your interactions with people in the company – all I am suggesting is that you not change the way you interact because you are negotiating.  It may come across the wrong way.
  4. LEARN NEGOTIATION STRATEGIES – Because many women have not been trained in how to effectively negotiate, we may be too direct when we go into a negotiation, particularly when we negotiate for ourselves. Therefore, read about different negotiation strategies (some resources are listed below), and practice with your roommate or someone at the Career Center. If you practice, you will get better. But remember even if you do not feel confident after you practice or feel that you are ‘good’ at it, that does not mean you should not negotiate. When you avoid negotiating, you are choosing to not participate in the full interview process. This may lead the employer to believe they could have offered you an even lower salary, possibly resulting in lower salary offers for women who are hired after you.
  5. BE A GOOD SPORT – It is important to not take the negotiation process personally. View it as a puzzle or a game. Unless you are explicitly told that salaries at the company are never negotiated, the company expects you to negotiate. And just like a game, you cannot get upset if you do not get what you want. It is poor manners. Learn from the experience and move forward.
  6. KEEP IT PROFESSIONAL – Male or female, I believe it is better to be professional, friendly, and calm, rather than demanding, overly chatty, and unfocused.
  7. SALARY IS ONLY ONE PIECE – If you really cannot bring yourself to negotiate your salary, ask for other forms of compensation or increases in other forms of compensation – moving expenses, start-up funds (academia or research position), vacation time, a larger office, a fancier computer, a faster promotion schedule, etc.

The most important thing to remember is that the worst that can happen is that the company says “no”. Then you get the salary they originally offered. In the best case scenario, you get what you ask for and even if there is a little bit of a social cost upfront, you are getting the salary you deserve. Not negotiating is a disservice to not only yourself and your hard work, but also to other women who are trying to negotiate. It further propels the stereotype that women who negotiate are pushy. Another important outcome is that you likely raise the salary for the next female who gets an offer. You are helping to adjust the baseline.

I must be completely honest. I have never negotiated my salary. I have always taken the salary or raise I was given. Why? Similar to my students, it seemed fair and reasonable. I also began my career when salary tools that exist today were not available. I have also never complained about a raise, even if I thought it was unfair. While I feel perfectly comfortable helping everyone else and giving them any negotiation insight I can, I have to admit my own failure to recognize that I needed help. By not negotiating, I have certainly left thousands of dollars in lost earnings on the table.

I only recently learned how small differences in compensation early in one’s career add up over time. I know a number of women at similar stages in their careers who are great negotiators. I think they had good mentors and developed good strategies through the years. That is what I want for all of my students – to not go through the early part of your careers being intimidated or reluctant to negotiate. Take a risk. Learn now. Make mistakes now. Negotiate to help yourself.

Everyone needs to fight for compensation equity across gender and racial lines. Otherwise another generation will go through what my generation has. Let’s all push to make compensation equity a reality. Let’s all participate in the game.

Additional resource list:

Lisa Singh is a professor at Georgetown University and co-founder of <guWeCode>