A recent article in The New York Times likened companies attempting to solve the gender wage gap to a game of “whac-a-mole.” According to the “Vigilant Eye on Gender Pay Gap”, the wage gap issue is so complicated, if companies do not put the right series of fixes in place, the problem crops up elsewhere. One critical salary to negotiate effectively is the first one right out of college, where women are still under-negotiating their male counterparts, which can cost them hundreds of thousands of dollars over a lifetime. This early negotiation is tricky because most young people have not developed the instinct needed to effectively manage it: they may not know how to navigate the lack of transparency of salary information, how to read the body language of the negotiator, and basically, how the game is played. With companies still struggling to address the pay gap issue, and the need for young women to learn to negotiate as early as the first job out of college, we are reprising this week the very first blog post we published over two years ago, focusing on how to teach young women to negotiate their first salaries. We hope it helps!
In one class in the early days, I had an eye-opening conversation with the young women students about worth. Specifically, an initial conversation about the students’ ideas of their financial worth in the workplace, as they contemplated the topic of salary negotiations, revealed some interesting insights into these young women’s ways of thinking about money. I explained to the students that young men graduating from college are still negotiating higher salaries than young women. When we discussed the prospect of asking for a higher salary than what was initially offered in a new job, concerns were voiced about asking for more. One young woman said she felt that she was the one who should sacrifice, and not ask for more money as it could hurt the company or other people working there. Another young woman said she would never ask for a raise; she would expect her hard work to speak for itself. The conversation continued to follow this theme of not thinking to or being willing to negotiate a higher salary.
We followed the discussion with an exercise where the students researched the salary level for a job they might like to do one day, and then paired up in an activity to negotiate starting salaries. The students were instructed to say “No” to the first offer they were given by their partner, and then present reasons, based on their experience and research, why they should be paid more. We have done this exercise in more than one seminar of young women, and usually get the response that it was difficult and strange for most of the young women to ask for more money, even if they had the experience and research to back up their request. But, we also get the reaction that asking for what they are worth — and frequently receiving a higher salary in the activity — is also liberating and, yes, empowering.
Salary negotiations are a brilliant example of the economic concept of information asymmetry — an obvious imbalance of power — as they are seldom transparent. For example, most negotiators do not disclose what other members of the company are being paid, how much they really have to spend on the position, and the factors in the calculation of employee value. We teach our students that research is a critical piece, and that knowing what a job should pay is necessary before entering the negotiation. But what is truly relevant about these early conversations about worth is the young women’s orientation toward money, about their perceptions of their financial value in the workplace, and about their willingness to have a voice when it comes to expressing and owning their worth. This information and understanding is key to providing financial education to young women that ends the gender wage gap, and empowers women to earn the income they deserve, and need, to take care of themselves.