Remember math word problems in high school? “Why do we need to figure out when two trains will meet each other?” asked many a high school student.  Quickly followed by the ever popular lament,  “I’ll never use Algebra in real life.”  Well, we were wrong.  One place to use Algebra is salary negotiation.  We need it to figure out what salary we should target; what salary we should ask for; and what salary will be the rock bottom.

Here is our word problem of the day.  Lilly has been offered a job as a Civil Engineer in Dallas, TX.    The job offer includes a starting salary of $80,000.  What salary should Lilly state as her counter-offer?

Unlike in high school, this is a word problem that does not include all the information.  You will need to do some research on your own.  The first thing is to find out about the salaries for civil engineers in Dallas, TX.  A quick search on Salary.com and we find that there are many levels of Civil Engineers.

For this example, we have selected Civil Engineer III as the appropriate level.  According to Salary.com the median salary is $78,480.  At first glance an offer of $80,000 seems good.

Remember here at EqualPayNegotiations.com our goal is to negotiate a salary that is on par with what the boys make.  To do this we will need to consider exactly what the median salary means.   Consider these two facts:

1. Approximately 50% of the US population is male (49.2%) and female (50.8%) according to the US 2010 Census
2. American women earn 23% less then men according to the US Dept of Commerce.  This would equal 77 cents to each dollar a man earns.

That would mean that the median (50% of Civil Engineers in Dallas make less and 50% of Civil Engineers in Dallas make more than $78,480) would not be an accurate depiction of the amount men make in the field.

When you do not know the ratio of men to women working in a field, I recommend using the following calculations to determine the median by sex. This will assume the 50/50 split in population carries to any particular field.

M = 0.885X

Median for All = M

Median for Men = X

Median for Women = 0.77 X

50/50 split in population

$78,480 = 0.5 X + (0.5) 0.77X

$78,480 = 0.5X + 0.385 X

$78,480 = 0.885 X

$78,480/0.885 = X

$88,677.97 = X = Median Salary for Men

(.77) $88,677.97 = $68,282.03 = Median Salary for Women

The $80,000 offer that at first glance seemed very accurate now seems too low by more then $8,600.    Based on this information, I would counter with a salary near the 95% range of  $94,000.  We need to ask for more than what we want so $94,000 will give room for additional negotiations if necessary.  Then again, this is all based on getting the median salary assuming Lilly is the typical civil engineer with the typical experience.

When you do know the ratio of men to women working in a field, I recommend incorporating that ratio to get more accurate data for your negotiations.  I have found one source that cites that women make up 10.8% of civil engineers.

Thus the formula needs to be adjusted.

M = (% of men in field) X + (% of women in field) 0.77X

Median for All = M

Median for Men = X

Median for Women = 0.77 X

89.2/10.8 split in population

$78,480 = 0.892X + (0.108) 0.77X

$78,480 =0 .892X +0.0832X

$78,480 = 0.975X

$78,480/ 0.975 = X

$80,492 = X = Median Salary for Men

(.77) $80,492 = $61,978.84 = Median Salary for Women

Knowing the make up of the field does change perspective.  The $80,000 salary once again looks acceptable yet we still want to counter the offer.  Remember the first salary offer is like the sticker price of a car.  There is typically if not always room for improvement.  My counter would be in the range of the 75% ($86K) to 90% ($94K).  What would your’s be?

© Copyright 2011, Katie Donovan. All rights reserved. Reproduction without explicit permission is prohibited

Now that I promote negotiating salaries to women, I get to hear the “war” stories of women who have negotiated higher salaries for themselves.    I also hear from women in unions that they don’t need to worry about this since the union takes care of it for them.  I took them at their word and left it at that.   That is until recently.

Recently, I talked with a woman who works for a public school system and is a member of a union.  Even though she belongs to a union she did not assume that the union had taken care of everything for her.  So, after six months of working in the school system she met with her boss and discussed salary and her total compensation plan.  Both she and her boss needed to stay within the guidelines negotiated by the union but there was room for a higher salary, which she got.

She opened my eyes and reinforced that we all need to spend some time researching our options.  The research can include contacting your union representative and reading the current union contract.    Just remember you may be missing out unless you have proof that you are making as much as you can for the job you are doing.

© Copyright 2011, Katie Donovan. All rights reserved. Reproduction without explicit permission is prohibited

Back in the fall, Princeton University’s Center for Health and Wellbeing released research on the salary that optimizes individual’s daily happiness.   At $75,000 we have maximized our happiness. Oh there are other benefits to making more money but it will not impact your daily happy quotient.

This is anecdotal but I think women tend to ask themselves what salary will they be “happy with” instead of what salary the job is worth.  In this case,  “happy with” isn’t about our daily happiness but more about settling.  Kind of like settling for the last donut in the box even though it is squished; settling for the shoes that don’t quite fit but they look great with the outfit; or settling for the guy who doesn’t make the heart sing but he keeps showing up.

Think of it.  When you last looked for a new job or were getting your annual performance review, did you think “I would be happy making $X?”  Did you do the new math of adulthood?

Mortgage/Rent + car payment + student loan + credit card payments + food + day care + insurance + tax + gas + utilities + clothes + entertainment + 401K

= I can live on $X 

= I’d be happy making $X

Do you think these are the questions professional athletes ask themselves?  I doubt it. Tom Brady, the quarterback for The New England Patriots will make $18 million if they actually play football during 2011. Do you think he could have been happy with $1 million or $2 million or any one of the $17 millions that come before 18?  Probably.  Especially when you think he was a sixth round pick and a backup quarterback who may not have played had Drew Bledsoe not been injured in 2001.  Mr. Brady hasn’t looked back since he got the starting quarterback gig.  He’s negotiated better contracts and now he is considered the highest paid football player.

Salaries are a scorecard for athletes.  If I am a better player than Mr. Y than I better make more money then Mr. Y.  The beautiful thing about athletes is that it is all objective.  There are statistics galore.  Even better than the stats is the fact that both salaries and stats are public knowledge.  There is nothing hidden behind the curtain.  It only makes sense that Tom Brady becomes the highest paid player since he is considered one of the best players and best brands in football.

We working Janes may not have as much information as Tom Brady’s agent when negotiating our salaries but much information is attainable today. Glassdoor.com, Payscale.com, Salary.com and SalaryExpert.com are just some of the many web sites with data that you can use.   So, next time you are thinking about your salary ask yourself a new question.  “What salary is the job I do worth?”  Then start researching to find out.

@ Copyright 2011, Katie Donovan. All rights reserved. Reproduction without explicit permission is prohibited

Salary negotiations start long before the first interview.  Preparation is key to successful negotiations and the preparation begins as you apply for a job.  Why even apply if the likelihood is low that you could make ends meet on the job?

In the case study “A Friend Referred Me” we left off with some of the questions you will need to research before deciding to accept a job offer.  First on the list is finding out what the job is worth.

A quick search on one of many salary web sites will help you determine if the job most likely will offer the salary that will meet your financial needs.  Ther are sites that are primarily salary research sites and there are many job sites that include salary research.  Here are a few:

• Payscale.com
• Monster.com
• New York Times

I’ll use Salary.com to research a Marketing Manager position in Boston.  The median salary for a Marketing Manager in Boston is $97,699 according to Salary.com but that is not the complete story.  There are many other variables that will affect the salary.  Company size and Industry are two elements and Salary.com give you the ability to fine-tune your research.

Note:  there is a section about you but we will hold off discussing that section to the next post “What are you Worth?

Another consideration is the job title itself.  Companies try to use job titles which accurately describe the job and which are generally accepted yet some companies like to infuse their company’s personality into the job titles.  So you may find yourself applying for Company Evangelist, Chief Promoter, or some other unique title.  Do your best to find the best match in a salary research site to do your research.

When you find the right title consider the entire compensation package and not just the salary.   The additional detail can show you that a job typically has bonuses or commission.

Since men are typically making 20+% more than women than you need to aim above the median salary and compensation package to be consistent with men’s pay.   For a marketing manager’s job in the Boston area you should use the $114K salary which is at the 75% mark on the salary graph as a goal for your negotiations.   That number will help you stay above the 50% point which should always be the goal when negotiating.

There is more research needed but this is a great first step to knowing if a job offer is equitable.  More to come in future posts.

@ Copyright 2011, Katie Donovan. All rights reserved. Reproduction without explicit permission is prohibited