The Importance of Salary Data when Negotiating Job Offers
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The current state of pay transparency and salary gaps in the U.S.
The future of fair pay depends on better pay transparency. And the momentum is growing. Nearly 80% of U.S. employees agree, reporting that they want some form of pay transparency. And in at least 14 states and 5 cities across America, pay transparency is required. But while some progress has been made, there’s still a large pay gap between white men and underrepresented minorities.
Women earn $0.82 for every dollar earned by men, and the gap is larger when you compare white men to women of color. American Indian and Alaska Native women earn $0.72 for every dollar earned by a white man (compared to American Indian and Alaska Native men earning $0.88 for every dollar earned by a white man). For Hispanic women, the current gap starts at $0.78 (compared to Hispanic men earning $0.91). And for Black women, the current gap starts at $0.79 (compared to black men earning $0.90).
Companies are not required or incentivized to publish findings on gender pay gaps. For example, In 2022, 43% of the 100 largest companies conducted a racial/ethnic pay gap analysis and only 22% released their findings. And in 2023, only 23% of the largest U.S. companies conducted a similar study on the gender pay gap. Out of 215 companies, only 75% reported the results.
Why can’t we close this gap? While there are a variety of reasons for gender and racial pay gaps, there’s one that stands out: employees don’t know if they’re paid fairly.
The first disadvantage employees have is in pay conversations.
For most employees, pay negotiation happens only 5 - 7x in their career.
On the flip side, recruiters interact with an average of 50 new hires every year, giving them exponentially more experience negotiating salary. Plus, employers often pay expensive fees to access comp data that they don’t – and aren’t required to – share with employees. These advantages compound to hurt employees who aren’t experienced negotiators.
The bad data employees use to negotiate salary.
For too many employees, fear and a lack of information prevents them from negotiating their salary. At least 53% of employees avoid a salary negotiation discussion because they don’t feel comfortable asking for more money. 48% avoid these conversations because they are afraid the employer will decide not to hire them. And nearly 40% of employees say they don’t negotiate because they don’t want to appear greedy.
The same is true for employees who get promoted—55% don’t ask for a higher salary when they’re offered a new position.
But when 45% of employees do decide to negotiate salary, most make the biggest mistake—using free, unverified comp data available online.
Free online salary data is riddled with problems. The salary info isn’t verified. These sites aggregate self-reported data from anyone who will add to their database. And too many employees have reasons to inflate or under-report what they make. For some, they don’t want their employer to identify them based on their title or compensation, and for others, overreporting can just be an exercise in ego. Plus, some employees include total comp in their final salary number, while others just include a base salary.
These free, unverified salary sites offer no insight into how each employee’s company manages compensation. Do they value benefits over base comp? Do they pay at the 75th percentile? There’s often no way to know.
Other sites don’t categorize data based on location, industry, skill level, management experience, or other areas that are critical to understanding a true comp package. And for nearly every site, the upkeep on data is nonexistent. There’s no way to know if the information is recent, relevant, or collected years ago.
Other salary data doesn’t offer much support to employees either.
Outside of using free, unverified data online to attempt a better approach at negotiating salary, employees sometimes have access to two other options—surveys and professional associations.
These alternatives don’t offer much more support.
Surveys from consulting firms or other orgs usually include a large number of jobs—spread out across the country, skill level, and industry. These surveys are published months after gathering the data, making the information outdated.
Professional associations collect salary data from their members to try and aggregate average salary information or to give new members an incentive to join. The problem with this data is similar to the other areas people look for salary information—it’s outdated, reported without verification, doesn’t account for a full comp package, and in many cases, the datasets are too small to be useful.
Negotiating without verified data doesn’t work.
The world of compensation is built to benefit employers. Companies hoard compensation data so they can keep employee costs down. This billion-dollar industry keeps real, verified data in the hands of employers and out of the hands of those who would use it to be paid fairly.
When employees try to use unverified data in salary negotiations, employers can easily point to flaws in the data, citing the data they pay for and that they know is accurate.
But here’s the good news. Employers are still willing to negotiate, especially for new hires. At least 75% of employers say they are willing to negotiate salary on an initial job offer. With better data, employees can be armed with a real chance at the negotiation.
How to use verified comp data to negotiate effectively.
Once you have access to verified comp data (don’t worry, we’ll show you how), there are a few key steps to take to ensure you negotiate effectively.
1. Get clear on the company’s comp philosophy.
During the interview process, ask to understand the company’s compensation philosophy. This can give critical insight into how the company views talent and what they’re willing to pay. If you can’t get access to the full philosophy, ask if the company pays at a specific percentile. Knowing what percentile the company pays at can help you understand where they’ll likely be willing to pay against your verified salary information.
2. Understand what tier or level your role is categorized as today.
Whether you’re reviewing a new job offer, a promotion, or simply preparing for your annual review, it’s imperative that you understand what tier or level your role is categorized at today. Many companies assign a level to each job, helping them band salaries, identify required skills, and plan hiring across the org. If you can understand where your role is categorized, you can point out what skills you bring to the table, understand how much room you have for growth, and compare your offer against other verified salary data.
3. Use verified data to share what others at your level earn.
With knowledge of the company’s comp philosophy (specifically, their strategy on if they pay at a specific percentile) and the tier of your role, you can use verified data to share what others at your level earn. By pointing to verified comp data, employers can see your research is accurate and your counter number is fair. Plus, with verified comp data, you can point to similar companies and employees in the same location as you to increase the data accuracy.
4. Give a specific number that will make you sign an offer today.
After you present your salary research—citing the comp philosophy, the role level, and verified comp data—create urgency with your negotiation by giving a specific number that will make you sign an offer ASAP. Don’t give a range, give a specific salary number and let the recruiter know that if they can offer that number, you’ll sign an offer today.
Where can you find verified comp data?
So where can you find verified comp data to help you negotiate effectively? Today, there is only one place that’s gathering verified comp data to make it available for employees—FairComp.
Join us as we build the first-ever verified compensation database, available to employees just like you. Sign up today to see how your salary compares and help us build our database of verified compensation.
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