The Negotiating Gap

The Negotiating Gap

Prior pay isn’t the only reason why women end up with lower salaries.

The time-honored tactic of asking a job applicant the simple question, “What’s your current salary?” or “How much did you make at your last job?” is quickly becoming verboten in the corporate world.

Nine states and eight local governments prohibit salary history inquiries, with many large companies voluntarily changing their interview protocols. While it’s not yet illegal in Minnesota, asking about salary history in a job interview or on an application form subjects an employer to heavy penalties in states ranging from Massachusetts to Oregon and cities including New Orleans and Chicago.

Why salary history bans? Because applicants who are women will almost always have to report a lower current or prior salary than will men, thanks to the gender wage gap that’s still stuck at 79 percent—that is, for every dollar a man earns in the United States, a woman earns 79 cents. And it’s even worse for minority women: 63 cents for black women and 54 cents for Latina women compared to every dollar paid to white men.

In salary negotiations, women can show how strategic, calm, and tactical they are.

In terms of total dollars lost over a lifetime of working, not including the impact on retirement benefits and Social Security, the career wage gap is particularly startling for women with a college degree who work full time for 40 years. Women with the most education lose the most in earnings: well over $700,000 during the course of their career, according to the Center for American Progress. Over a 10-year period, women CEOs lose a median average of more than $3 million compared to male CEOs. Would that devastating statistic have been altered if educated women didn’t have to say what they were previously making in job interviews? Not likely, although it might have helped.

Yet the irony of employers not being able to ask about salary is that job applicants are now more likely to be able to negotiate their starting salaries. That sounds like a good thing—except if you’re a woman. Even after decades of analysis about why the gender wage gap exists—occupational choice, motherhood penalties, time out of the workforce, blatant discrimination—few studies focus on why women avoid negotiating for themselves. Receiving a good job offer, even if it’s for “the dream job of a lifetime,” is precisely that: an offer, not a deal.

New York Magazine’s “The Cut” recently asked 25 prominent women in business and entertainment their advice for women negotiating their salaries. Most dramatic was Michelle Obama’s experience. She described bringing her infant daughter Sasha into the interview room when, as a Chicago lawyer, she sought (successfully) a raise, a flexible schedule, and full-time pay. Sheryl Sandberg claimed she was ready to take the first offer from Facebook’s Mark Zuckerberg until her brother-in-law told her that no man would ever take the first offer. Actress Meryl Streep said it took her until age 55 to learn how to deal on her own behalf.

So how can women not only become better negotiators, but actually reach pay equity in their own careers? First of all, they need to start treating the act of negotiation itself as an opportunity to show how strategic, calm, and tactical they are. Instead of worrying about the stereotype that women who negotiate look too aggressive, too entitled, and too greedy (definitely traits seen as unattractive in women, and in some, but not all, men), a smart female might start the “money” part of the interview with this comment: “Thanks for the opening offer. Now I look forward to negotiating a fair salary with you, and I’m ready to present my facts.”

For every dollar a man earns in the United States, a woman earns 79 cents.

It is axiomatic that every employer will consider a salary negotiation successful when it has the least impact on the bottom line. Put simply, the less the company must pay to get the most talent, the better. That is who is sitting on the other side of the table. The woman negotiating for herself is often not thinking in such bilateral terms. Rather, her focus is on the relationship she seeks to foster or maintain in the job itself. She is thinking that how she is perceived while asking for more money now will determine how she is thought of as a colleague and employee later.

That’s not how salary negotiations work. This is the finite moment in time that the company expects applicants to press for the most they can get. No permanent relationship is thwarted because one of the parties risks sounding boastful in a conversation about her qualifications. Even if the position description lists “humility” as a job requirement, no one expects that trait to appear in a salary negotiation.

Bankers and financial advisors love to talk about compound interest that “snowballs” into wealth. For their part, pay equity specialists emphasize the “compound” nature of too-low salaries that jeopardize future, and even lifetime, earnings. Progressive laws such as salary history bans, minimum wage hikes, and wage transparency protections will likely help working women. But the ability to negotiate the highest possible salary for oneself is a skill arguably more valuable to working women than piecemeal legislation. Even better, this skill can close the personal wage gap, at least for a savvy woman with the good sense to keep negotiating.

Linda L. Holstein is a Minneapolis writer, trial lawyer, and veteran employment law attorney with her own law firm, Holstein Law Group. She helps businesses and individuals with workplace issues, including MSP Communications.

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