With the shaky state of the labor market for young adults these days, it’s no wonder slightly less than half of new employees negotiate their salaries, according to CareerBuilder.com. Many are just happy to have a job at all. But neglecting to negotiate can balloon into a hugely expensive mistake. Salary.com determined that a young adult can lose a little over a million dollars in lifetime earnings if they just accept the salary they’re offered.
Salary.com runs two scenarios, both young adults starting out on a 45-year career trajectory with an opening salary offer of $45,000, which is roughly the average entry-level salary for the class of 2013, according to the National Association of Colleges and Employers. “Jim” takes the offer and subsequently gets a 1% raise every year. “Jane” negotiates another $5,000 at the outset, and an additional 4% raise every third year in addition to the same 1% Jim gets. In just five years, Jane makes about $6,800 more than Jim; by the time both retire, her salary is more than $43,000 higher than his.
Altogether, Jane earns $1,037,773 more than Jim. Over the years, she could use this money to pay down student loans, save for a down payment on a house and invest for retirement — all of which has a multiplier effect on that difference in their salaries.
Even if you’re not new to the workforce, negotiating a raise during your next performance review can have a positive effect on your future earning potential. Here’s what career experts say about how to negotiate higher pay, whether you just landed your first full-time job or you’ve been at your workplace longer than the coffee machine.
Lay the groundwork with research. “Start by researching the fair market salary range for your position, education, experience and location before your negotiation,” says Abby Euler, general manager of Salary.com, an IBM Company. Do some digging into the company’s financial health, too. “If the company is not meeting revenue goals, your salary request will most likely fall on deaf ears,” she points out.
Quantify your value. “What is the unique value you’re providing, and how can it be quantified?” says Kim E. Ruyle, president of Inventive Talent Consulting, LLC. “How does it compare with what others make providing comparable value?”
Toot your own horn. “Have your talking points ready to show how your contributions and performance have helped improve your company’s bottom line,” Euler says. Highlight things like how you increased revenue or where you saved company money, times when you went above and beyond your job role or exceeded your goals.
See what else you can negotiate. ”An employer may not always be in a financial position to meet a specific salary requirement, but they usually can offer some other perk such as flexible schedules, telecommuting options, more vacation time, higher title, an office, reimbursement for mobile devices, etc.,” says CareerBuilder spokeswoman Jennifer Grasz.
Don’t fear rejection. Realize your boss isn’t going to take it personally if you ask for more money, Euler says. In a recent survey, “84% of managers expect you to negotiate your salary or job offer,” and none said they would fire anybody who asked for a raise.
Avoid threats. “Don’t tell your boss you are being recruited” if it’s not true, says Heidi Golledge, CEO of CyberCoders and CareerBliss. This casts doubt on your loyalty, which is the last thing you want your boss thinking. Instead, “Ensure they know you love it there and are ready to take your commitment to the next level, but need more monetary commitment from them,” Golledge says.
Make it about them, not you. If you’re getting married or having a baby, that’s great news — but milestones like this aren’t good reasons to ask for more money, Euler says. “Stay focused on how your performance and work has positively benefited the company. Show data and use examples whenever possible to explain your raise-worthy performance.”