Fair pay in a tough market: mastering salary negotiation during a recession
Mar 08, 2023
With the pending economic downturn in the United States, the word “recession” is at the top of mind for many Americans. The National Bureau of Economic Research defines a recession as, “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” While most economists are in agreement that the country is not in a recession yet, many foresee a mild one hitting soon—though some do argue that actually, economic growth is possible. Overall, feelings are mixed.
The job market is not in bad shape, as it turns out. While there has certainly been a noticeable influx of layoff announcements at some high-profile tech and media companies in recent weeks and months, the fact of the matter is that most workers in the US are still employed. As the Bureau of Labor Statistics reported in January, the unemployment rate of 3.4% is the lowest in 54 years.
Still, with any sense of economic foreboding, job applicants across industries might be wary when it comes to stating salary expectations, and candidates for open roles might be nervous to negotiate pay for a role they were offered.
Pro tip: tread lightly
When it comes to seeking employment in the midst of economic hard times—can job hunters still negotiate salaries? Or, a better question, should they? Longtime New York City-based career counselor Lynn Berger says that the only way to answer this question is for job candidates to fully examine the context of their respective situations.
“You would have to look at the industry, how many positions are available, whether there have been layoffs at the company,” she said. “Usually, salary talks are dependent upon the industry, and currently some are hurting, and some are not. For instance, tech is losing many jobs, but other fields aren’t as much. You have to account for what industry you are in.” Berger adds that where a job candidate is in their career also affects whether or not it is appropriate for them to ask for more pay. This is true in any situation, but especially during an economic downturn.
Ultimately, Berger says a candidate must consider everything, especially timing. “If there were recent layoffs at the company you want to work for, I wouldn’t ask for a raise just yet,” she explains. “I’d wait until things settled down, and then once I got to work, I would keep track of my accomplishments and how I was adding value. Then, when the company’s financials are improving, I would reach out about a raise.”
Linnea Bywall, Head of People at the Stockholm-based Alva Labs, states that a candidate’s chance of succeeding with salary negotiations during a recession depends on a few different factors. “Everything depends on the company’s financial health, how crucial the role is, and how many other candidates they have in the pipeline,” she says. Bywall adds that, even during an economic downturn, it’s ok to ask for the pay you want. “Candidates that negotiate tend to get a higher salary than candidates that don’t negotiate,” she explains, adding that in her opinion, it’s all about how you do it.
Bywall provides five things to consider before asking for a higher salary:
- Make sure you know your market value. Ask around to find out what other people are being paid or use some benchmark service to ensure that you have relevant data points to hand.
- Mentally set up three different salary levels for yourself ahead of the negotiation. Identify your (1) pain point—the lowest salary you would accept, (2) your ideal pay—the level you think you should get, and (3) your dream salary—the level you would do backflips for if you got it.
- Prepare your arguments for why you should get a certain salary. Never argue for a higher salary because you have costs to cover; that is not the company’s problem. Instead, focus on what value you can bring to the organization and sell this!
- Be humble in your negotiation. Playing hardball can help, but Bywall would argue that it often backfires. “I would much rather negotiate with someone having relevant arguments and a friendly tone than someone who is not open to dialogue.”
- Don’t forget that it is okay to consider an offer. You can ask the recruiter if you can think about the offer over the day and get back tomorrow. Often, they will be happy to let you think things over.
There are certainly other ways job candidates can prepare before entering the process of negotiating the salary for a new role, especially during economic hard times. For instance, Bywall says that a tip she gives candidates is to, “Inquire about the level of interest the position has attracted early on.” This is something she says should always be asked during the application process. “The worst thing that can happen is that you get a no.”
If you’re already employed…
And what can employees—not job candidates for new roles—do if they would like to negotiate their salary during economic hard times? Can they ask for raises, bonuses, or promotions?
Berger explains that an existing employee at a company who might want a raise or promotion should, like job candidates, always consider the context. “If several of your colleagues are laid off, I wouldn’t ask for a promotion the day after that,” she said. “I would wait until I could show how I was doing more work and taking on more responsibilities and save that talk for the future.”
Bywall, meanwhile, says that if an employee shows up with relevant, objective arguments, she will always listen and consider a raise or promotion. “Recession or not, no company wants to lose good employees,” she says. “Hiring and onboarding someone new is a lot more expensive than keeping current talent.”
In the end, if a recession hits in 2023, job candidates should do their best to remain determined and not lose hope. Employment numbers remain very much up and, despite the recent devastating layoffs in certain industries, there are nevertheless ways to try to garner the pay you want for a new position.
By treading lightly and staying cautious—while at the same time remaining aware, taking context into account, and conducting proper preparation—a job candidate has a good chance of succeeding in obtaining the salary they want.
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