The Mayor of Philadelphia recently signed a measure that would ban Philly employers from asking candidates about their salary history. The intent of the bill is to curb wage discrimination and close the wage gap.
The Chamber of Commerce and Comcast (one of the city’s largest employers) have threatened legal action, citing the First Amendment and concerns about Philly being able to compete with other markets. There are similar bills being considered across the US, and Philly’s bill was inspired by a similar one in Massachusetts last year.
I say, “Good”, for two reasons.
If removing the salary history requirement will help end gender wage disparities and discrimination, that is something we should all be on board with in our industry (and any other). The optics of gender in technology aren’t good, and whether the reality is better or worse is up for debate.
I’m also grateful for the new law in a more selfish manner.
As a recruiter, asking about salary history was often a point of contention when screening a candidate, and the first question that might start to break the trust between us. The reason I would ask history was driven by my clients (hiring companies), who would typically require me to provide salary history and expectations on all candidates submitted. When a candidate was submitted without history, it wasn’t uncommon to have the client respond with a request to go back and get that information.
I was trained to save any talk about salary history until late in a conversation, with the theory that if you have built some rapport with the candidate you are more likely to get honest answers. You can’t just call someone and say “Hey, how are you and how much do you make?” The conversation about their background and interests might be going great, and at some point you’ve got to segue into the money talk.
Usually I would make that segue after a question about job search criteria. I might ask “What are the top three things you are seeking in a new position?” If one of the answers was related to compensation, I’d transition into drilling down a bit on those details. If there was no mention of money, I would say something like, “Well nobody works for free. Let’s talk about salary for a minute.”
At my first recruiting job, I was instructed to abruptly end conversations with anyone unwilling to answer the question (usually after being asked in a few different ways).
Taking the salary history question off the table may enable recruiters and their candidates to have a bit more of a trusting relationship. This bill doesn’t do much to alter any natural misalignment in incentives that exist between recruiters and job seekers, but it will at least prevent recruiters from having to ask (and candidates from having to answer) a question that they were probably not all that comfortable with from the start.
I hope more bills like this pass elsewhere. I expect they will.
But even without a law in place, there is nothing preventing employers from instructing their recruiters (both internal and third-party agencies) to explicitly stop asking for salary history. Employers can work to solve this issue without legislation.
My work requires me to talk about compensation history and expectations with thousands of technology professionals across a wide range of experience every year. We start with a discussion of job search criteria and what types of opportunities are most attractive, then talk about technical background and experience, and by the time the topic of money surfaces I’m usually in a decent position to guess their current salary and talk about their market rate.
The recent DZone Developer Happiness Survey concluded that over 40% of readers felt they were underpaid. 40% was well above what I expected, and from my personal experience I would put the number closer to 15-20%. That’s still a significant number.
Market Rate is Tricky
I’ve never taken the time to try and develop some kind of elaborate mathematical formula for market rate, as I’m not qualified to do so and my expertise tends to fall into a couple specific markets. There is also nuance that needs to be considered on both the candidate and employer side.
A few examples:
- Two candidates with identical technical experience might expect different salaries depending on the business model of the employer that hires them. The consulting company that expects to bill out the hire (say at an hourly rate where rate > salary/1000) probably offers a higher salary than an insurance company, because the employee’s value to the consulting company is easier to accurately quantify. A software product company may fall in between.
- Value of certain technical skill sets is also a factor, where someone showing production experience with a new language or framework may benefit from supply and demand inefficiencies much more than older and established language users.
- Different employers will place a different value on past experience. Startups may value those with startup experience higher compared to those from larger companies, so three years of Python experience can be worth different amounts depending on where the experience was earned and what company is hiring. When we start to consider both new and old technologies at a variety of employer types, it’s easy to see how confusing market rate might become.
- Salary tends to plateau at certain experience levels, so a salary difference between 15 and 20 years of experience is often attributed to the types of work much more than the overall years.
This nuance is a potential issue with much of the publicly available salary data. For one, much of the data is self-reported and unverified, and those in the industry have little personal incentive to underreport earnings in anonymous salary surveys. If tech pros want to maintain high salaries, overreporting salary might be a better strategy, as the data may be used both by candidates negotiating offers as well as other employers trying to make sure their own offers are competitive.
How to Find Out
Agency recruiters (aka “headhunters”) — If you feel that recruiters are useless bottom-feeders on the industry, this is your chance to use a service of theirs for free. Any experienced recruiter with knowledge of your market should be able and willing to give some insight into your earnings potential. The pushy ones will want to meet you face-to-face (a ten minute phone call is a reasonable request, as they will need some info to give an accurate estimate), and of course they will try to recruit you. Tell them that you are first interested in hearing their opinion on your market rate, and if you decide to explore opportunities you may consider their services based on how they handle this request.
Poll some friends — Asking others how much they earn has historically been considered a bit taboo (at least in the US), but industry insiders are exposed to data and their input can be useful in your quest. Instead of the “How much do you make?” question, one alternative would be to ask friends what they think your market rate should be based on your background (just like you asked the headhunter). And use extreme caution if you choose to speak to current co-workers about any compensation topics.
Research — You can spend hours on various sites that claim their data is more accurate than the others. The potential utility of that data has been discussed above.
Interview — This is the most accurate method to get your answer and also might help to keep interview skills sharp, but unfortunately it’s also the most time-consuming. Some in the industry take issue with the act of interviewing in order to discover market rate, but as long as you are (A) at least slightly open to the possibility of accepting a great offer and (B) are honest in all discussions with interviewers I see no ethical issues.
Just because you feel underpaid doesn’t mean it true, but it’s worth exploring to find out. The problem can potentially be corrected without leaving (or even threatening to leave) your current job.
Negotiating job offers is a skill, and many are reluctant to even attempt it. Like interviewing, negotiation is something that most professionals may only do a few times (or less) a decade, so it’s not the type of skill that gets honed through regular use.
One question that I often hear relates to scenarios where a candidate provides a target salary/range on an application or in the interview process, the employer makes an offer at or above that range, and the candidate suddenly doesn’t know what to do. Conventional wisdom (and perhaps ethics) would suggest that one should accept such an offer, but when an employer matches the candidate’s request without hesitation it can make candidates feel their request was too low.
If you list your house for sale on a Friday and receive five full-price offers before the weekend is over, most people will tell you that you set your bar too low in a competitive market.
It could be that the salary request was “at market”, but one natural reaction to having a salary request met without reluctance is that the candidate “left money on the table“. This feeling is often accompanied with some regrets, and some candidates wonder whether or not they can still negotiate even though they got what they wanted.
What to Do?
It is potentially a risky endeavor, but if you choose to negotiate an offer that met your request you’re going to need a reason. A common negotiation mistake inexperienced job seekers make is giving the appearance that they are negotiating just for the sake of negotiating, and employers that met your initial asking price will feel any new requests are not a good faith negotiation.
Did you uncover new information since setting your target number?
The most effective way to negotiate a matched request is to tie a counteroffer to new information learned after you provided the original number. This new information typically needs to be a detail that one couldn’t have reasonably expected to know at the time the desired salary was provided.
Some good examples of this include:
- Responsibility – Does the job have more responsibility than you initially would have assumed?
- Work/life balance – Are the expectations for hours in the office above what one would expect? Does the position require you to be “on call”?
- Benefits and perks – These are usually discussed later in the interview process or even after an offer is made, so it’s reasonable to assume that many job seekers will be asked for desired salary numbers well before they learn the value of the other pieces of the overall compensation package. The major variables impacting overall package value tend to be health insurance contribution, paid time-off, bonus, and stock.
- Your own market value – Admitting that you underestimated your own market value it the least attractive option. A job seeker claiming this will be viewed as someone who was unprepared.
I would expect most instances where candidates submit counteroffers above their initial asking price relate to multiple offers from other employers. In highly competitive markets, above average candidates may expect offers that will include some from companies that pay their employees above market rate. Using other offers as a negotiation tool has become rather common in the industry, though some employers may not be willing to engage in renegotation if an initial request was matched.
It’s important to keep data on any salary numbers (historical and requested) provided during the hiring process and to be prepared with numbers handy in case you are asked. Keep in mind that companies traditionally want information on salary expectations before committing to interviews. The process of negotiating an offer above the listed expectation can be complex, but it’s not impossible given the proper circumstances.
Advice on salary negotiation is abundant, but material written for the general public may not always be applicable to a technology sector where demand is high and the most sought after talent is scarce. There is quite a bit of misinformation and the glorified mythology of negotiation is often mistaken for the much less interesting reality where little negotiation actually takes place.
Let’s start by going over a few “rules” that are often thrown around in these discussions.
Using absolutes is never a good idea (see what I did there?), and there are definite situations when you should not negotiate an offer. For example, entry-level candidates who are considered replaceable with other entry-level candidates often do more harm than good by negotiating, particularly when the job being offered is among the most desirable. We will cover when you should and should not negotiate a bit later, but there are clearly some conditions when it’s not a great idea.
There’s no harm in asking for more/Doesn’t hurt to ask
Actually, sometimes it does. When you propose a counteroffer, there are only a few realistic outcomes.