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March 22, 2009

Comments

Ryan (The Idealistic Investor)

Dave,

You make a good point about the accuracy and abundance of salary estimation tools, but I don’t think that’s where the critical asymmetries lie.

The critical asymmetries lie in a lack of knowledge about how the general statistics apply to a particular situation.

If I apply for a job, I have no idea whether the prospective employer is under extreme pressure to hire immediately, or whether s/he intends to proceed with great patience. Likewise, the prospective employer doesn’t know whether I’m casually browsing for the right opportunity or desperate to stop foreclosure on my house. There are many other key unknowns that affect the negotiations.

In my case, the asymmetry laid in the fact that my prospective employer had no idea that I was hideously underpaid. Their eventual offer was more than double my existing salary at the time, and I would have happily accepted $20K less. For all they knew, I was a typical candidate receiving typical pay at my current job. Revealing my salary history would have shown them that they had the upper hand and could get me for a song and dance.

I’m with you on the curiosity about salary negotiations since the start of 2009. Desperation due to the bad economy ups the ante.

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