When I graduated from business school, I barely negotiated my pay. I figured that they were already giving me so much, would negotiating my salary offer really matter? They were moving me across the country from North Carolina to Los Angeles. I received a sign on bonus for accepting my offer by a certain date. And they were paying me enough.
So why ask for more? Why get greedy?
I did manage to ask for a little more (and get it), but it was a boost on my move compensation, not my salary. Once it was gone, it was gone (and trust me, I spent it quickly).
When I came across a study that looked at the average salary difference for men and women leaving an MBA program, I was intrigued. Women left school negotiating far less and earning, on average, 7% less than their male classmates.
7%. Ok…that doesn’t feel like that much. In numbers terms that would mean that the woman (let’s call her Jill) was making $100,000 and the man (let’s call him Jack) was making $107,000.
It’s a difference, sure, but really you’re still making enough.
But it turns out this difference is huge when you look at it over a span of 35 years.
Jack and Jill graduate and there is a salary gap of $7,000. Jack and Jill then proceed to get a raise the next year. They get the same raise (5%) but that raise is on their base salary.
Jack is making $112,350 and Jill is making $105,000. The gap is now $7,350. No big deal, right?
If we continue this for the next 35 years, with Jack and Jill getting the same percentage raises each year, we are left with a significant difference. Cumulatively, Jack will have earned $1.1 million more than Jill during his career.
What started as a $7,000 difference is now a $1.1 million difference.
Now that sounds like a lot.
What if Jack is able to invest that difference in salary each year? If in the first year he invests $7,000 and gets an average return of 5% over 35 years, that $7,000 investment becomes $38,000. And if he does that every year for the next 35 years, he’ll end up with an investment account of over $2.1 million. Just from $7,000.
I got a little math enthusiastic here, but just remember this:
$7,000 is worth millions. So don’t settle for enough. Ask for what you deserve.
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