Not making as much as you think you should? This might be why.
No one likes to talk about salaries. For some reason, it makes us all VERY uncomfortable. You would be shocked to hear how many executives and truly talented people, whom have no problem standing in front of crowds and speaking authoritatively on all sorts of topics, completely fall to pieces when you ask them one simple question: "How much do you make?" Lucky for them, recent legislation prohibits employers from asking about current salaries, but at some point in job discussions, we all run smack into the compensation issue.
Boss Ladies, it pains me to tell you that far too often when I have talked about compensation with women, the numbers they share with me are shockingly low. We are all well aware now of the gender divide. In 2016, women were paid just 80% of what their male counterparts were. (Check out the full report here.) There are loads of reasons why, which we can discuss at a later time, but one reason that I think goes overlooked often and is something we can actually fix: changing jobs.
Did you know that the average pay increase for a job holder is 3%?! That means that you should expect your compensation to increase by 3% year over year. Where as historically, pay raises were thought to reflect performance, they are now far more often tied to inflation. Companies generally use bonuses to reward employees for performance which is a result of our complicated tax system and how bonuses are taxed differently than salaries. Now here's the crazy part, for senior level employees, the average wage increase when going to a new job at a different company is 21%. That's right- 21%!!! This number is smaller for employees that aren't at the senior level, but not always. In my experience, I have always seen at least a 25% increase in my pay when switching to a new role.
So you see what the problem might be... You join a company, really like the work you are doing, and are generally happy with your life. So one year turns into two which turns into five then suddenly it's ten years! You go out to dinner with a friend to celebrate because you hit a milestone and she just got a new job, her fourth new job in those same ten years. Somehow the conversation turns to salary and when you hear how much she's making, your jaw hits the floor. She's a flaky employee, barely staying at a place long enough to understand how it works, much less see through her achievements?! How did this happen? We'll spell it out:
You:
First job $40,000
Year 2: 3% increase: $41,200, 42, 436
Year 4: 3% increase year 3 and new role year 4 with additional 5% plus standard 3%: approximately $45,850.
Year 6: increase year five of 3% and new role again year 6 with 10% plus standard 3%: approximately $53,000
Year 10: standard increases years 7, 8, and 9 and new role again year 10 with 10% plus 3%: approximately $66,000
Your Friend:
First job: underpaid at start-up: $30,000
year two: 3% increase: approx. $31,000
year four: changed companies year three and negotiated to $40,000 with a sign on bonus of 10,000, paid out 5K the first year and 5k the second year plus 3% raise year four:$46, 200
Year five: Changed companies again: Negotiated increase of 25% plus sign on bonus of 15K paid up front: $57,750 plus $15,000 because she had to relocate= total comp: $75,750
Year six: Is promoted within her new company. New role comes with standard 3% plus 8%: approx: $64,000
Year ten: stayed with company year 7 with 3% increase- approx. $66,000. Changed jobs year 8 and negotiated for 20% increase plus 20K to move back: $79,000 plus $20,000= total comp $99,000. in year nine she was given a standard 3% so comp: $81,000. Year ten she accepts the new job you are celebrating and she negotiates a 15% increase plus a $20,000 sign on bonus: $93,000 plus $20,000 = $113,000
So your change over time at the same company: $40,000 to $66,000
Your friend's change: $30,000 to $113,000!!!!
Granted, your friend took on a lot of risk each time she changed jobs. You had a guaranteed increase. But even if your friend had been let go or taken some time off in between roles, the rate at which she grew her salary far surpasses yours. And neither of these scenarios take into account negotiating bonuses or other benefits like time off and retirement contributions.
To sum it all up, this Boss Lady knows that in order to achieve results and success, you often have to stay at a company for more than a year, but whenever I reach two years in a company, I start to weigh the opportunity costs of staying versus leaving. Don't overlook the value of going on job interviews and exploring opportunities to know your worth in the market and negotiate for bigger raises either. And don't forget that on average it takes at least three months to get a job offer. TIME is MONEY Boss Ladies. We want you Boss Ladies to have Boss salaries.
When you're ready to make the leap, we're here to help you through.
Want More. Be BOSSY.
Laura
