One way that companies are expressing support for the Black Lives Matter movement is by re-evaluating if they’ve previously underpaid minorities. If you’re a Black American, woman, or other minority, than you should consider renegotiating your salary.
Don’t forget that just last year, Oracle was accused of engaging in discriminatory practices. Apparently, Oracle underpaid thousands of its women, black and Asian employees by more than $400 million.
At present, many employers are having a reckoning about pay and equality by race, ethnicity and gender. But after such a tumultuous year, it is reasonable that perhaps you don’t want to ruffle any feathers. Regardless here’s why you should consider renegotiating your salary.
Why You Should Negotiate Your Salary
What if I told you that accepting a $60K initial salary as opposed to negotiating for a $67K 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 $67K? Mindblown? Mine too.
Minorities and Women Are Often Underpaid
Consider a study by the Economic Policy Institute that regardless of education, white workers out-earn their black colleagues. Among workers with advanced degrees, the average hourly wage for whites was $44.46, compared with $36.23 for Black Americans.
For many years, best-selling books have suggested that women and minorities simply don’t ask for more, thereby leaving money on the table. However, recent studies have found that women and minorities DO negotiate, they’re just more likely to be told “no.”
Minorities and Women Often Told “No”
A study by University of Virginia found that white and black candidates were equally likely to negotiate their salary. However, some employers are more likely to penalize black candidates for negotiating by granting fewer salary concessions. The study concluded that explicit racial bias—a belief in the dominance of certain groups over other groups, based on factors such as race—remains a significant obstacle for Black Americans in the job market.
Additionally, a 2018 Harvard Business Review study discovered that 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. It’s 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.
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, don’t forget the power of compound interest.
If you think of a $60K salary, and one person negotiates and gets $67K 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?
By not negotiating a $7000 increase in your salary, you are forfeiting over $1 million in 35 years time!!
Should You Negotiate Now?
We are certainly living under difficult times and many people have lost their jobs. This might make you queasy about discussing your salary with your employer. My suggestion would be to assess how your employer is faring. If your company is facing difficulties, then it’s probably not a good time to bring up salaries. However, just because you can’t negotiate now doesn’t mean you can’t start collecting your evidence and other information for when the time is right.
You know what they say, knowledge is power so best to have the information and then use it when needed.