Thursday, April 2, 2009

Salary? We don't need no stinking salary.

Two questions that create the most panic in a jobseeker are requests for salary history and requests for salary needs. On a rare occasion, these fears meet in one jobseeker with definitively contradictory concerns. For instance, sometime last year Bubba came to see me about an upcoming interview. Prior to his interview, he had been asked to supply both a salary history and current salary requirements. Bubba was soon to receive his PhD in Physics, but was completely baffled by how to solve his dilemma. He was afraid that if he listed his actual salary as a PhD student (just over $17,000/yr) that he would not be taken seriously, on the other hand he was fearful that listing salary requirements that were too high would result in his be eliminated from the pool based on that alone. He approached the problem with a strategy that I recommend for most applicants. He did not get the job, but we were both satisfied that his denial had nothing to do with his response to the salary questions and for the record, he did get an offer a few weeks later that met his salary needs.

Today's entry? How to tell an employer what salary you need, even if you have never had it before.

Those who do not learn from history are probably just tired.
This part is really pretty simple. When someone asks you for your salary history, you give it to them. Bubba's big concern was that he was going to list his $17,000 salary and the $60,000 jobs for which he was applying would simply blow away. Last year the average starting salary for a newly minted bachelor's level grad was between $39,000 and $42,000. During the previous four years, most of them had salaries between diddle and squat and yet companies were more than willing to hire them anyway.

The other concern that I often hear raised is something like, "If my salaries have been low over the years, then the company will lowball me and I will not get a legit offer." We'll discuss a couple of resources below that should keep this from happening, but generally speaking salary equity exists in either an informal or formal manner in most organizations. More problematic than listing a salary history indicative of poverty is listing one that makes the prospective employer leery of being able to "afford" you.

A few years ago, I interviewed for an administrative position that was three miles from my home. At the time, I was commuting about 45 miles each way on a daily basis. The interview went quite well and it was clear that I fit well, but the dean called me a few days later to tell me that the committee had gone with another candidate because I was currently making $150 more per month than they could offer. He shared that he had "gone to bat" for me with HR, but they were unwilling too budge. Sadly, I pointed out to him that my monthly commute cost me in excess of $500 per month, so taking a $150 pay decrease would have been the equivalent to a $350 raise... not to mention the two hours of daily commute that I would save. His silence was eventually broken by a rather contrite, "Oh. Maybe we should have talked to you before just looking at your salary history." Duh.

When an application process requests your salary history either directly or indirectly, be sure that you share it in a way that they will understand. I pointed out to the grad student mentioned above that his $17,000 assistantship was technically for 30 hours per week (even though he generally put in 50 hours) and included another $12,000 in tuition and fees for a total of $29,000 for 30 hours per week for a 10 month academic year, or about $28 an hour for the 990 hours he worked during the academic year. Instead of listing a $17,000 or even $29,000 per year salary, we listed a $28 hourly wage. The other tip here is just because the blank you are asked to fill in on a job application requests an annual wage, you don't have to be an obedient sheep. Give them an hourly rate with an approximate number of hours worked each week.

Of course I will need that new 72" plasma screen, as well.
While I have worked with professionals such as established attorneys, physicians, MBA's, and senior management types over the years, my current gig puts soon to complete graduate students in my office. While they are stumped about how to list salary history, the fact is that history is what it is. So easy even a PhD can do it. When it comes to the dreaded, "What are your salary requirements?" questions, their reactions make one wonder what they have been doing for the past five or six years.

To be fair, whether secondary, post-secondary, or graduate, little of what occurs in formal education prepares new job seekers for the world of work. I always get a little chuckle out of students entering or re-entering the job market. For years, they have been living on Top Ramen and cold pizza purchased with the proceeds of coin scavenging expeditions conducted on pants pockets dredged out of the laundry baskets. When someone asks them what kind of salary they require, their extrapolations begin with, "Hmmm. If I move into a house with only four other people instead of eight and get my clothes at Walmart instead of the Salvation Army Thrift Store, I would probably need another $6,000 or $7,000 a year......." I have seen students so awed by the fact that they will be earning $18 an hour, that they don't realize that they will be making $37,000 a year, or $2000 below the average starting salary for a new graduate. Since Uncle Sam and (in California) Cousin Arnold will be taking about 25% of that total, their operating capital will be about $27,750. While we should all be realistic about constraints in the current economy, we should also be realistic about what our REQUIREMENTS are. Following is a basic template for you.

Equity and Market Value. The first and most basic element of understanding what we are worth on the market is understanding what others in similar jobs are earning. There are several online tools to assist in determining this, but remember that all of these tools will give you average salary, not necessarily entry-level salary. Bottomline is that there is no reason that you should not have a fairly good picture of what the going rate is for occupational titles.
  • Salary.Com - A fairly robust site that has both free and paid services. In general, the free salary calculator gives a very good idea of what you can expect to earn in broad job categories in various geographic areas.
  • SalaryList.Com - Takes a different approach. Instead of simply aggregating all salaries in general job category, SalaryList gives very specific information about very specific jobs with very specific companies. While I would not use this site without an aggregator site such as Salary.Com, it is an incredibly helpful data mining tool, especially if you can find a salary for the exact position you are applying for at the exact company that you are applying with.
  • GlassDoor.Com - This may be the most intriguing site I have seen recently. If you are a student and have a ".edu" email address, you can get a one-year free membership. If not you have to give them profile information about your current work situation, salary, and benefits. The information is kept confidential and it is possible to "disguise" yourself enough to feel comfortable. I gave them the requested information and got access to their salary database. Like SalaryList, it is possible to see what a specific job title at a specific company is earning.
Obligations and stuff. I spoke with a young man a few weeks ago who is still in his first job out of college. His primary concern was how to get rid of the gas-guzzling sports car that he bought right after he started his job. The monthly payment seemed to fit his budget, but as time went on, he realized that he had not really charted his course well and now the least of his "necessities" was a two-seater convertible that got 18mpg and had a six-year note at $299 per month. If a company asks "What are your salary requirements?" Rather than simply saying, "Uh. About $45K," try actually knowing what you are talking about. I would submit something like the following.

Housing$1500/mo (2BR APT near work)
Transportation$450/mo (gas, insurance, maintenance)
Professional Dues$50/mo
Medical Costs$100/mo
Miscellaneous Exp$400/mo
Total All Exp$$44,400/year
I am not suggesting that these specific amounts are correct for anyone, but the general categories are the minimums that you should take into account. Do not ballpark anything. Sit down and crunch the numbers.

A final word on value. I am worth more in California than I am in Alabama. (My wife would tell you that neither place is probably rushing to acquire me for their collection.) For instance, if I made $40,000 in Irvine, CA and managed to live well on that, I could probably keep the same lifestyle on just $30,000 in Birmingham, AL. You can make this calculation with one of the many online Cost of Living calculators. I typically use Sperling's Best, but there are others that you can Google. For the record, having lived in both Irvine, CA and Birmingham, AL, I can tell you that the calculators tend to overestimate high-end places to live and underestimate low-end places to live. The difference that most calculators give between these two regions is 53%. I my personal experience is that the difference is probably closer to 30-35%... still a dramatic difference.

You talkin' to me?
I suppose the last piece of this is what people need to know and when they need to know it. As a rule of thumb, I recommend that applicants not bring up the subject of money until a basic offer is in hand. If you know that widget makers generally $10/hour and you are interviewing for a widget maker position, it is realistic to assume that you will be offered $10/hour. When an offer is finally made, should it less than $10/hour then you should say, "Dude. I was expecting $10/hour," or maybe something a little more tactful.

If you are asked in a face to face interview before an offer is made what your salary expectations are and you haven't followed my instructions, so you don't have a spreadsheet handy and you don't know what widget maker earn, then try this.
"You know, I have tracked ABX Widgets and found out that you are one of the top widgeteers in the country. I am assuming that your salaries are competitive with other widgety companies in the area, so I believe that if an offer is made that we can find a salary that will suit both of us."
If they persist and say that they cannot make an offer without knowing your position, simply indicate that you would like an opportunity to put some numbers together so that you can give them a fair assessment. As with many other aspects of job-hunting, however, the mere fact that this is occurring is a bad sign and should serve to make you somewhat nervous about signing on with them. Tacky, bullying behavior should be used as a negative screening mechanism.

I ain't afraid of no ghost!
Scared to talk about money? Who you gonna call? Here's the deal. The primary reason that people freak out about salary discussions/negotiations is because they have not prepared themselves for the market. Our observation is that the majority of jobseekers under-estimate what they actually need and over-estimate what they believe they will be offered. Spending a little bit of time organizing your research about salary and expenses will keep you from getting slimed when you actually get a job offer.


  1. I'm so glad to see someone say that it's okay to tell a prospective employer what your salary requirement. When I applied for my current job, it said that applications without a salary requirement would not be considered. I did a little research and came up with a number and gave it to them. Ever since, every time I come across something that says to withhold salary information, it's made me so frustrated because I know (from conversations I've had since I was hired) that my company would have tossed my application had I not given them a number.

  2. Thanks for this informative post. It's succinct and direct in a way that a recently minted PhD on his way out of academe needs to hear.