Are You Worth More Or Less Than Average?

Last Updated Jul 28, 2011 7:23 AM EDT

Recently in DailyWorth, a financial e-newsletter for women, a social media editor wrote of trying to negotiate a raise after scoring a promotion. She felt quite underpaid (something she has in common with roughly half of Americans). She did her research and found that the average in her industry for the new position was $40,000 per year. She was earning about $32,500 in her previous job.
She psyched herself into asking for $37,000. Then her boss called and offered her a bit under $35,000. She asked for more, and they eventually settled at $36,400.

On one level, it's a happy story. Research (see Women Don't Ask, by Linda Babcock and Sara Laschever) finds that young women often don't negotiate their early salaries. One analysis of new graduates with master's degrees from Carnegie Mellon found that men were 8 times more likely to ask for more than they were offered than young women with the same degree. Negotiation doesn't always work, but it does often enough that it contributes to the ongoing pay gap between men and women. So it was good that our social media editor negotiated up.

But...here's the bigger question. If the industry average is $40,000, why did she convince herself that she was worth less than that? Why was the number she practiced asking for $37,000, instead of $40,000 (average) or $43,000 or even $45,000? Some comments on the post suggested that a man in the same situation would have looked for reasons that he was worth more than the average.

Even if you take the gender angle out of it, it's still an interesting question. If you know roughly what people in your industry are paid, what makes you decide you are worth more or less than that? If you think you are worth more than average, how much more than average are you willing to go? If you're a manager negotiating with your new hires, how much more than an industry average are you willing to pay to land someone? Are you surprised if someone asks for much less or much more?

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Photo courtesy flickr user, winnifredxoxo