Why wouldn't use the tools you have in a negotiation?

mrsconn23

Dear Prudence,
I work in an office where my co-workers and I all work for different contractors. We sit right next to one another doing the same work every day, and we all have the same degrees and knowledge base. Each of the contracting companies offers different payments and benefits. I recently found out that someone hired a year after me by a different company is making more than $10,000 a year more than I am. I know employers frown on discussing salaries, but can I use this information to negotiate my salary? I understand there is always this kind of risk when working with a subcontractor, but I think this pay difference is absurd. We live in an expensive area. I hear my co-workers talking about retirement savings and buying homes, yet I feel like I will never get ahead. I love my job and don’t plan on leaving. How do I approach this without hurting my relationship with my employer?

—Paycheck Envy

charlotte989875

Document all the value you've added to the company, list out your skills, show that what you've done has brought in money and ask for a raise. Now you have a good idea of what to ask for, but don't go in with "well X employee makes Y amount", but demonstrate your value and why you deserve more. 

short+sassy

charlotte989875 said:

Document all the value you've added to the company, list out your skills, show that what you've done has brought in money and ask for a raise. Now you have a good idea of what to ask for, but don't go in with "well X employee makes Y amount", but demonstrate your value and why you deserve more. 

I would also bring in stats for what the "going rate" is in the area for that particular position.  But wouldn't mention the person working for a different contractor.

I worked in an environment exactly like this.  Giant floors of cubes.  A dozen different defense contracting companies working on the same Naval project.  It was an incestuous place, lol.  People often jumped ship to go work for a different company.  I did!  When layoffs were looming at my company.  My friend I met there, who worked for a different company, hooked me up with an opening they had.

But that could be another option for the LW.  Apply for an open, better paying position with another company.  And then leave if he/she gets a better offer or use it as a bargaining tool for a raise.

Though, one potential problem with a large raise, is I'd bet dollars to doughnuts that this is a situation where his hours are charged back to his company's client.  So the LW's bill rate is set in stone in that contract. 

Here's an example, I'll use pretend numbers.  He's paid the equivalent of $20/hour.  The bill rate with the client for his hours are $43/hour.  He wants a raise to $25/hour.  When you add on another "third" for all the other employer costs (ie PTO, medical insurance, holidays, SS, unemployment insurance).  His "real cost" moves from $27/hour to $33/hour.  Now the company is only profiting $10/hour as opposed to $16/hour.  That's a big difference!  And it isn't including whatever overhead costs there are for employees either.

Of course, we don't know how much he makes.  If he earns a lot more than my example, a $10K salary bump would not change the profit margin as dramatically. 

I see now I have spent way too much time in my life scouring over timesheets and preparing client invoices, lol.

southernbelle0915

Maybe look for opportunities at the higher-paying contractor? 

kvruns

I wonder if this $10K coworker is an outlier or if this higher salary is par for the course with the other similarly situated coworkers. 

Ro041

This is one of major pet peeves - "I know employers frown on discussing salaries..."

Do you know why employers frown upon discussing salaries with other employees?  It gives the EMPLOYEES power and removes the power from the Employer.  Once wages are discussed openly, people are able to use that information to bargain higher wages.  If a culture of secrecy is encouraged, the only party to benefit is the employer.  

As an aside, the National Labor Relations Act protects employees' rights to discuss wages, hours and working conditions with each other.  So, if the employee went in and talked to their company about their wage rate and mention the other employee's wage rate, that conversation may very well be protected by federal law and the employee cannot be discriminated against (disciplined, fired) for knowing and using that information.  

*Barbie*

i think one of the issues that could come into play is total compensation between the contracting agencies, and individual contracts between the parent company and each contracting agency. the other factors would be education, experience, certifications, and performance, etc. for each individual employee. 

I manage the approvals on bills from our contracting agencies, so i have visibility on wage rates for all of our contract employees. There is variability across agencies, and even within the same agency for the "same job." 

This person could have been recruited by the contracting agency from a higher paying job, and they needed to match or beat his/her current rate. They could have a skill or certification or degree or background experience that LW doesn't. They could have a better performance rating than LW.

Was LW satisfied with his/her compensation prior to talking to the co-worker? Like the title, the LW needs to advocate for themselves, build a case, and request an increase. I've done that for my last 2 promotions, and a pretty significant mid-promotion increase. The mid-promotion increase is not the norm at my company, especially the overall increase that I got (~12-13%). I went to my boss, provided justification, kept up with stellar performance, and he went to the overall leadership team and HR on my behalf and got me an increase. If LW isn't willing and able to advocate for themselves, then they need to be content with what they have or look for opportunities elsewhere. 

short+sassy

Ro041 said:

This is one of major pet peeves - "I know employers frown on discussing salaries..."

Do you know why employers frown upon discussing salaries with other employees?  It gives the EMPLOYEES power and removes the power from the Employer.  Once wages are discussed openly, people are able to use that information to bargain higher wages.  If a culture of secrecy is encouraged, the only part to benefit is the employer.  

As an aside, the National Labor Relations Act protects employees' rights to discuss wages, hours and working conditions with each other.  So, if the employee went in and talked to their company about their wage rate and mention the other employee's wage rate, that conversation may very well be protected by federal law and the employee cannot be discriminated against (disciplined, fired) for knowing and using that information.  

Thanks for pointing that out.  And, at least for me, the fact that the other person works for a different company was why I didn't think the LW should mention it in their discussion with their employer.  I think it would give less weight to his/her argument because the boss could blow that off with a lot of excuses.  Perhaps even legitimate excuses.

However, if we tweaked the situation a bit and it was another employee -- in the same company, with exactly the same title, but with less seniority--then I think the wage disparity should definitely be brought up.  And there might still be legit reasons that person's wages are higher.

On  similar topic, I had a previous job where one of our projects was ending.  That was about half the people that my boss and I supported.  There was an employee on that project who basically had the same job I did.  One of us was staying and one of us was going to be laid off.  She had 3 years more seniority than I did, but I had a Bachelor's and she didn't.  I found this out all, after the fact.  But apparently Corporate was going to lay me off because she had seniority.  However, my boss wanted to keep me and he went to bat for me.  The only leg he had to stand on was my educational credentials and he was able to change their minds with that.  As an aside, she got a great job about a month later with a different defense contractor.  So win-win for everyone.