Students Negotiate Job Wages Against Themselves, Lower Wages Follow

By Daniel Melchor

As students transitioning into the workforce, it is incredibly important that we understand how to help ourselves with regards to employment, and be able to negotiate on behalf of ourselves. Unfortunately, it is not just fresh-grads who are without these skills and protections today, it is employees from intersections of industry across the state. The issue is simple: too many people in California are providing salary and wage information to employer, which can lead to lower pay.

When employers ask for previous wage information, they are looking to make an offer based off of what previous employers thought one’s labor was worth. Why is payment history important for employers when hiring? Does providing wage information hurt one’s future financial prospects? The San Francisco-based company Earning found in a 2016 survey that only 42 percent of young men, and 26 percent of young women negotiate pay.1 Compound this with people being hurt from providing previous wage information, and it is natural that over time future generations will become weaker at negotiating pay and will earn less. I will attempt to provide solutions that will diminish lower pay for students.

The popular perceptions on wage questions, asked of a surveyed group in Fresno, CA, are that employers are seeking to “rip-off” workers. Oftentimes, employers are more than willing to pay more for labor than one would imagine. By asking potential employees previous wage information, employers can often pay less and negotiate with what would seem to be incriminating information from job seekers.¹

In my personal experience, I found it difficult to negotiate higher wages as my wage history held me back. In my first job as a Vonage Sales Representative in Fresno, CA, I settled for minimum wage and accepted what was offered to me. I had no wage history. Working for more than a year, I gained invaluable experience. I dealt with customers of all backgrounds and endured what many with retail jobs that emphasize commission or sales know‐you must sell. Never take no for an answer. I decided to move on to a better sales job as a result of the constant pressure to sell regardless of the means of doing so, and the insufficient pay.

In the future interviews and in the applications to come, interviews would ask for my wage history. I had the option to tell employers, such as Nordstrom (I would go on to work for them), how much I had been paid previously, or inflate that number. Whatever it would be, regardless of experience, whether I had worked a year or not at a previous job, it was difficult to negotiate at a young age.

The low wages offered to me by previous employers didn’t help in job negotiations. My counter offers were rejected 100% of the time . An increase of a dollar or more to my wages was impossible due to my previous wage histories. My wage history was valued more than my work history. Moreover, I felt that to leave boxes empty on applications and to ignore an interviewer’s question regarding previous wages would hurt me in my job prospects. Furthermore, I would find that though I had spent fewer hours at a job and had less work experience, I would still outperform peers with more significant work history. My peers voluntarily explained how much they were paid. In my first months on the job, I earned departmental recognitions, but was paid less than others who were not working as hard and who provided less value to the company. Previous wages histories hurt my chances of starting strong. Economist Thomas Metcalf explains perfectly that in the interview stages, employers attempt to limit bargaining power by asking you previous wage information. If other candidates are providing this information, this lowers your bargaining power when you receive an offer.²

Despite this epidemic of lack of capital to negotiate, there are policies built to prevent against this. A current policy in place is AB-168, and the California Equal Pay Act of 1949.3 AB-168 directly prohibits employers, both public and private from orally, in writing, or in person to ask for previous wage information. The California Equal Pay Act of 1949 targets wage discrimination against women. Both these existing laws attempt to diminish discrimination not only for women but also for people with less opportunities. Discrimination affects them because historically there have been preferences for who to hire and for how much. As an example, AB-168 helps women‐by giving them the liberty to not provide previous wage information, they have more control in negotiating their wage. If they were paid less in a previous job, they wouldn’t have to fight an uphill battle with a potential employer on why they are worth more in wages. In other words, low wages from the past will not anchor them down.

When looking at potential alternatives, two come to mind: firstly, to let present trends continue, and second to focus on enforcing recently passed legislation.

Letting present trends continue undisturbed would leave it to chance for existing efforts to diminish the defined problem. Currently, there is legislation in place protecting workers against wage discrimination. The status quo would include AB-168.

On the other hand, we could pursue the alternative. This alternative would build off of the first alternative. While similar, it is different than the first alternative. For instance, by focusing on the enforcement of this legislation, one can help inform job seekers of their rights. This can be enforced by adhering to similar policies implemented in the state, as it relates to employers being prohibited from asking for previous wage information. An example is the city of San Francisco. San Francisco’s Parity in Pay Ordinance prohibits employers from asking wage information from applicants. The ordinance is enforced via its Office of Labor Standards Enforcement group, or OLSE.5 Applicants can report anonymously to OLSE of any violations in the ordinance and the agency will investigate and can impose fines.⁶ The funding for an agency charged with enforcing these types of ordinances can come from employers who can deposit one penny per hour of work performed by each hourly employee into a city enforcement fund or can come from requiring businesses to pay an annual licensing fee to fund enforcement.⁷

In order to evaluate these two solutions against each other, we must use metrics of efficiency and quality. The considerations that matter the most are the outcomes that alternatives will bring via the two criteria. Efficiency was used because having laws in place that are enforced and that can help people increase their negotiation power for a higher wage is important for students. Equality was used because not everyone should be rubber-stamped for minimum pay. Everyone has the right to negotiate higher wages without the past holding one back. Everyone learns through experience and the young learn a lot, especially after their first jobs. If minimum wage laws aren’t going up, people should be able to comfortably reason why their time is worth more.

Efficiency means people accepting higher wages, people getting paid more, and the closing of any wage gaps. A metric for efficiency would statistically be able to show that under AB-168, people have gradually increased their labor value.

In the equality criteria and in relation to equity fairness and justice where it relates, access to jobs were considered, such as methods on diminishing hiring discrimination and the amount of people obtaining jobs and higher wages by declining to provide previous wage histories.

However, after weighing these two together, we can determine that AB-168 is the status quo and the status quo will be great for job seekers in California. However, individuals must be aware of their rights. For example, by making better-informed decisions one can diminish wage gaps, so for this reason, alternative two, focusing on state enforcement, is recommended. The Senate Rules Committee found no fiscal impact in the local level of California of enforcement. As a result, one can simply expect the local government to better market the legislation so that people can better inform themselves of one of their many labor rights. This can be done by growing an agency or establishing a labor specific branch that can focus on enforcing labor laws. The government should focus on better enforcing AB-168.⁸

Endnotes

1. Danielle Paquette, “Why Young Women Are Still Less Likely to Negotiate a Job Offer,” Los Angeles Times, July 10, 2016. http://www.latimes.com/business/la-fi-women-negotiate-pay-20160707-snap-story.html.
2. Thomas Metcalf, “How to Negotiate an Hourly Rate,” Career Trend, July 05, 2017, , accessed April 03, 2018, https://careertrend.com/how-6525713-negotiate-hourly-rate.html.
3. United States of America, California State Senate, Senate Rules Committee, Third Reading: AB 168, by Eggman (D) (Sacramento, CA: Office of Senate Floor Analysis, 2017), 3-4.
4. Ibid., 4-6.Works Cited
5. Anthony Zaller, “Can California Employers Ask Applicants About Prior Pay History?” California Employment Law Report, September 15, 2017. https://www.californiaemploymentlawreport.com/2017/09/can-california-employers-ask- applicants-prior-pay-history/.
6. Jana Clark, “ARTICLE 33J: PARITY IN PAY,” San Francisco Government Legistar, 2017. https://sfgov.legistar.com/View.ashx?M=F&ID=5096758&GUID=E9033BB0-1110-41C1- A79A-62599476B1A0.
7. “The Top 5 Enforcement Tools for Local Minimum Wage Laws,” National Employment Law Project, December 02, 2015. http://www.nelp.org/publication/the-top-5-enforcement-tools-for-local-minimum-wage-laws/.
8. Ibid., 6.