If you've had the bad luck to get hired after 2008, you can expect your recession-weary employer to dole out a lower starting salary. Most people would take the job anyway.
According to FINS' informal Sign or Decline survey, 65% of 750 respondents said they'd sign onto their dream job if they were to be paid less than their new coworkers.
While that may seem unfair or unreasonable, Al Lee, director of quantitative analysis for Seattle-based PayScale, an online provider of employee compensation data, says that you should think hard before you turn down an otherwise appealing offer.
According to the PayScale Index, which tracks quarterly changes in compensation for full-time, private-sector employees, wages for people with equal skills and qualifications have been trending lower or plateauing since the end of 2008, when the recession was at its peak. "People who were hired before the recession hit were paid at that market's reality," Lee said, which for many companies were above-market wages. Today, however, companies are hiring talent with the same skills at, or in many cases below, the current market averages.
In other words, those who started their jobs when the going was great got lucky, Lee said. Companies often can't retain talent when they try to cut salaries of more seasoned staff, so they stiff the new hires instead.
That can be a tough pill to swallow. "It's especially harder for people later in their career," said Lee. "They may not ever make as much as they did five years ago. It may be lower than what others are making, but that's the way it goes now. You can't be angry that someone else got a better deal."
For those who are early in their careers, the current reality might not match their expectations while in college or graduate school. They should still get their foot in the door as soon as they can. "If you aren't really senior, and you're still going to grow, expand, and become more effective, you'd hope that a rational employer would see that you're as productive as everyone else, and give you bigger raises down the line," Lee said. "It will hopefully equal out in the long term."
Economic factors aside, it's a good idea to seek out as much objective information on salaries as you can to make sure you're not being ripped off. Also consider whether the pay disparity is due to the company's current business reality, or something less rational before deciding to accept an offer.
"If the dynamics are that they used to pay more, but they can't pay at that level anymore, that's one thing," said Lee. "But if they're paying other people higher because they graduated from the same school as the boss, or they're the CEO's brothers, or because they like someone else more than you, that's a different story."
Finally, consider whether working is better than being unemployed."You don't want to sell yourself short," Lee said, "but depending on what your dream job is, it could be the case that you'll come in being paid 10% to 15% lower than the people who came in earlier than you."
What Would You Do?
Answer the question and see how you match up with the rest of the FINS community.
You've just been offered your dream job, but... you will make less money than others in your group.
Write to Kelly Eggers
Sign or Decline is a series of questions on FINS.com that ask what you would do for your dream job. Since its launch late last year, over 100,000 answers have been received and compiled in our database. Participate in Sign or Decline here.