Employers Lowballing New Hires

From the Wall Street Journal | June 5, 2010

The job market may be recovering, but some salary offers are still a
few years behind.

Since the labor market began picking up steam,
companies hiring for entry-level or administrative spots with pay that
would normally range from $40,000 to $50,000 have been offering workers
$28,000 to $38,000, says Randy Miller, founder and chief executive of
ReadyMinds, a Lyndhurst, N.J., provider of online career counseling and
coaching.

For workers further up the food
chain, an offer that might have been $100,000 a few years ago is now
coming in at $85,000 or $90,000, he says.

"Companies are more
worried these days about margins, profitability, and they are cutting
costs across the board. Even though [workers are] qualified and have
prior experience, the hiring department has been told to set a budget at
a lower range," Mr. Miller says. "Everybody is more price-sensitive
these days."

As the labor market slowly heals, some hiring
managers are offering salaries lower than what workers previously
received. The question is: How low should workers go when it comes to
accepting an offer?

Long-Term Effects

Some job hunters
leap too soon at low-paying jobs, while others may be too optimistic
about how their skills translate into a current wage and hold out for
too long, experts say. While financial hardship is a strong motivator to
take a low-paying gig, job seekers should also be mindful that such a
position can stunt their future.

"Some people, because they are
embarrassed to be unemployed or because of the financial hardship, do
take a low-paying job, though the prospects aren't that great, and they
stick with that job for a long time," says Gary Burtless, a labor
economist at the nonprofit Brookings Institution.

Hannah Riley
Bowles, an associate professor at Harvard Kennedy School who has studied
the attainment of leadership positions, says lower pay has long-term
effects. For one, raises are added to a lower base salary. "And think
about putting aside some percentage of your savings. You are putting
away a smaller [amount]," Ms. Riley Bowles says.

Experts say
workers can ask about educational and training opportunities. If you do
accept a low offer, make sure you're gaining in other ways, such as
valuable experience or access to a network that can advance your career.

"These
may be things that companies are more willing to provide right now than
salary," Ms. Riley Bowles says. "That is the way to beat the sad story
of: I started at a lower level and I am stuck at the lower level."

Job
seekers who receive a low offer should compare that offer to what they
can get elsewhere in the current market, rather than what they could
have received before the recession began, Ms. Riley Bowles says.

"It
would probably be unwise to walk away from an offer if it's
competitive. They should keep focused on the current economy, and not be
distracted by previous income," she says. "But that is hard to do
emotionally."

Sometimes, job seekers misjudge their own value in
the labor market. "People think that their qualifications and the state
of the job market are such that they could get a much better job," Mr.
Burtless says.

The problem with making such a miscalculation is
that the longer a worker remains jobless, the harder it is to impress
companies, he says. "They look at you and see that you haven't held a
job for a year and a half...usually their interpretation is not very
charitable if someone else is standing on line for a job and that person
hasn't been unemployed for as long."

Job seekers who have been
out of work for a long time should probably consider reasonable offers,
and make the best of it, says Walter Akana, a career strategist in
Decatur, Ga.

"You have lost your job, now is the first day of the
rest of your career. You may have to work yourself back into a position
of strength," Mr. Akana says. "Having said that, if someone has the
financial wherewithal to hold out then I think they ought to be doing a
lot of networking and looking for exactly the right kind of
opportunities."

With lower salary offers, other types of
compensation become more important, says ReadyMinds' Mr. Miller. Workers
should ask about all benefits -- sick days, vacation days, professional
training, health insurance, bonus structure -- and other provisions
such as relocation expenses. Also, workers should find out exactly how
frequently they will be eligible for a promotion and raise.

Room
for Negotiation

"It's then up to the individual, once they
receive their formal offer, [to] do their own industry research,
negotiate and possibly counter offer as best they can, and then decide
whether this is the best offer they are going to get," Mr. Miller says.

Karen
Chopra, a Washington-based career counselor working with higher-income
clients, says workers can offer to take a low salary in exchange for
working part time, say four days a week instead of five.

And there
may be room to negotiate once an employer has made an offer, she says.
"From the employer's point of view, recruiting is painful. They have
grown attached to their top candidate, started fantasizing about the
person in the job," Ms. Chopra says. "You have some leverage, they have
invested in you. Many companies expect a negotiation."

Write
to Ruth Mantell at ruth.mantell@dowjones.com