- According to Payscale data, women are 11 years behind men in terms of salary hike.
- Financial planner Rachel Lawrence said this puts pressure on women to learn how to negotiate.
- Lawrence, a former coach at investment startup Ellevest, shares his advice on the matter.
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There is often a lot at stake in negotiating a new job, but for women, the stakes go far beyond the deal in question.
For example, a report by compensation data firm PayScale found that while men’s earnings peaked around age 55, women’s earnings peaked closer to age 44.
This translates to 11 fewer years of wage growth and wealth creation, even though women have a higher average life expectancy.
According to Rachel Lawrence, chief financial planner at investment platform Ellevest, the mismatch often creates different career paths and pay curves for women, resulting in less wealth accumulation.
“The wealth gap isn’t just investment,” he said. “If you have less money to start with, you don’t have as much to invest, and so the wealth gap can grow exponentially.”
Lawrence said that negotiating during the hiring process, whether it’s to raise a salary or secure funding for a project, is an important area in which women can increase their income, which can be used to finance investments and build wealth.
While there are different strategies that he lays out depending on the situation, most of his advice comes down to research and approach.
Lawrence shares some of the approaches she suggested while working at Ellevest, a company that describes itself as “built by women, for women,” to help clients get the most out of their deals.
1. Research the company you are applying for
An initial step in any conversation, Lawrence said, is to have lots of information.
Candidates should use websites such as LinkedIn to estimate base salaries for the job they are applying for.
But that’s not all: In some industries, incentive compensation is more important.
“If you’re in sales, or if you’re responsible for running a business or anything where your work directly affects the company’s revenue, this should be the case for incentive compensation,” Lawrence said.
For those in the startup world or within a publicly traded organization, stock compensation is more common.
But most companies don’t have a defined path, Lawrence points out. If employees get any stake in the company it should be in the job description.
“During your selection process, this is a question you can ask after going through several rounds of interviews,” he said.
2. Conversation is a different thing in a startup
For women interested in working in the startup world, places like Angel List and Crunchbase have information on funding these projects.
“It can help you understand where they are” in terms of growth, he said, “because where you are really ultimately determines the compensation package.”
In its early stages, Lawrence stressed, the base salary at a startup will probably be lower, but the incentives and equity compensation will be higher once new hires become more staffed.
“You really need to understand what the equivalent startup will offer,” he said.
“This is if you really want to do a good job of comparing and knowing whether something is a good deal.”
3. Start a conversation to meet your needs
Although compensation packages are primarily based on the value you’ll bring to a company, Lawrence advises job seekers to consider what a given offer would mean to them personally.
For example, an offer with a low salary but high value may be “surprising” to some people.
But someone else may be a first-generation wealth-maker who has to support his family and negotiate a high base salary and low equity compensation.
The “personal situation of the candidate” can be a driver of part of this systemic wealth gap, Lawrence said, because it can determine how they interact.
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