With first job offers, graduates miss out on vital money

BY BEN MARKS | MAY 15, 2015 5:00 AM

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As the latest generation of college graduates take their last finals, and walk across the stage, they face the challenges of their first professional job and salary. But according to a recent study, many grads are missing out on valuable salary.

According to a recent joint study by financial education company Nerdwallet and employment website Looksharp, the majority of college grads do not negotiate their salary despite employers expecting them to.

Abbey Stauffer, lead Nerdwallet researcher for the study, said they found 64 percent of recent graduates do not negotiate their salaries, while 84 percent of employers said an entry-level candidate would not be putting their job offers at risk by attempting to negotiate salaries.

In addition, three-quarters of employers said they typically had room to increase their first salary offer by 5 to 10 percent during negotiations.

“What we saw was a clear message from employers that recent graduates do have the ability to negotiate,” she said.

Stauffer said salary negotiation, especially for a graduate’s first job, is particularly vital, because every annual promotion, or even future salary offers from different companies, are based on that initial number.

“You’re really doing yourself a disservice by not grabbing that extra money upfront, because all of your future raises are compounding on that number,” she said.

The study found a 5 percent increase in initial negotiations would equal around $170,000 more over the course of a person’s career.

The study also found an interesting gender disparity between negotiations.

Almost 30 percent more male graduates negotiated job offers than females, and no matter the industry, men consistently valued their work higher than women did theirs.

University of Iowa career adviser Mallory Becraft said there are numerous reasons a graduate might choose not to negotiate.

“For some students, they may feel uncomfortable negotiating for their first professional job,” she said.

“For other students, they may feel like they have received an acceptable offer and don’t feel the need to negotiate.”

The latter reason is why graduating UI senior Sara Linski said she didn’t negotiate her first salary offer.

“They gave me a number and the number was pretty high, so I felt like I should take it,” she said. “Looking back on it, though, I wish I would have [negotiated].”

After Linsk’s first salary offer, the company came back with one around $20,000 higher, and she immediately accepted.

UI business Lecturer Jeff Nock said he doesn’t advise every student to negotiate their starting salaries, especially when working for a large company.

“If they’re pursuing a job with a Fortune 500 company that’s going to offer the same job to 500 or 1,000 people, that company’s not going to negotiate,” he said.

However, at small or mid-range companies, Nock said, the salaries are not as set in stone and graduates should be able to negotiate effectively.

Graduates, he said, can’t simply ask for more money without demonstrating they’re worth it, such as an internship or a specific skill set.

In addition, Becraft said, graduates should consider more things than just salary when negotiating.

“Things like insurance coverage, relocation assistance, stock options, retirement plans, tuition reimbursement, and work location/hours are other important components to consider when negotiating,” she said.

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