Why You Need To Negotiate Your Salary ASAP

Are you thinking of starting a new job or recently got promoted? Then you should definitely negotiate your offer? Why you ask?

Well, what if I told you that accepting a $100K initial salary as opposed to negotiating for a $107K initial salary could over the course of your 35 year career force you to work at least an extra eight years in order to have just as much money at retirement as the person who started at $107K? Mindblown? Ours too.

The Research

We’ve all heard the saying, “There’s no harm in asking.” 

You don’t get what you don’t ask for, so you should always try to negotiate a job offer. Yet according to an old 2003 Harvard Business Review study, 57% of educated men negotiate their salary, while only 7% of educated women negotiate theirs. 

Many best-selling books, including Sheryl Sandberg’s Lean In and Linda Babcock and Sara Laschever’s research-based Women Don’t Ask suggested that women simply don’t ask for more, thereby leaving money on the table and contributing to the gender pay gap. For over a decade, the narrative was that a woman’s behavior was often to blame for the gender pay gap. Because of course we should blame women for their own misfortune, amiright? *Eye roll*

Women Often Told “No”

A 2018 Harvard Business Review study discovered that their new research contradicted their previous 2003 findings. Overall, women do ask just as much as men, but they are told “no” more often than men. 

I could’ve told you this simply from personal experience, yet it is nice to finally have research-based studies telling us what women worldwide know to be true. Women aren’t paid less than men because we’re okay with it and forget to ask, but because we are often turned down when we do “lean in”, ask for more, and stand up for ourselves at the negotiating table. You can’t lean into a door that’s nailed shut.

And if women don’t try to negotiate a new job offer, it just may be because they don’t believe they’re going to get it anyways and they are afraid of the reputational risk or of diminishing goodwill between them and their future employers. 

According to Stanford Professor Margaret A. Neele, this fear isn’t unfounded. If women negotiate for an increase in salary with a male boss, the research indicates that they will be penalized in a way that male peers won’t be. Female bosses are more likely to penalize both men and women , so it’s not like women are getting an advantage there. Despite the cards being stacked against women, it’s so important that we fight for our worth anyways.

“If you and your counterpart who negotiated are treated identically by the company, 35 years later, you will have to work (at least) eight more years to be as wealthy as your counterpart at retirement.”

There Is Harm In Not Asking

First, starting a job at a lower salary is closely linked to the growth progression of your career.

Secondly, according to Professor Neele: 

If you think of a $100K salary, and one person negotiates and gets $107K and the other doesn’t—what’s the cost of that? In a simple-minded way, some people say, “Is $7,000 really worth risking my reputation over?” And I agree, $7,000 may not be worth your reputation. But that’s not the correct analysis, because that $7,000 is compounded.

If you and your counterpart who negotiated are treated identically by the company—you are given the same raises and promotions—35 years later, you will have to work (at least) eight more years to be as wealthy as your counterpart at retirement. Now, the question is: $7,000 may not be worth the risk, but how about eight years of your life?

Put simply, because of compound interest, by not negotiating a $7000 increase in your salary, you are forfeiting over $1 million in 35 years time!!