The “Ask Gap”: Yet Another Statistic Proving Income Inequality
The lifetime, compounding effects of settling for a lower salary.
Inequality has been part of the human population since a group of cavemen hoarded plants for their own consumption, refusing to share with the other tribes.
Unfortunately for our ancestors, most instances of inequality were unable to be identified in real-time. In the present day, we have investigative journalism that can be broadcast instantaneously over the internet, allowing anyone and everyone to see just how unequal the world can be.
Wealth, education, healthcare, food, income.
There are gaps, oftentimes wide swaths, between the haves and the have-nots, and the Ask Gap is just the latest one I’ve come across.
The Compounding Effect of Lower Income
There is ample research into the negative effect that graduating into a recession has on one’s income.
To sum up: a recession means jobs are scarcer, which leads to lower initial salaries, which leads to lower long-term income.
Graduating in a recession leads to large initial earnings losses. These losses, which amount to about 9 percent of annual earnings in the initial stage, eventually recede, but slowly — halving within five years but not disappearing until about ten years after graduation.
That’s 10 years to get to parity in annual salary. Imagine how long it takes to get to wealth parity.
Sometimes, it doesn’t happen at all. Further, not everyone is affected by a recession the same way.
[The authors] find that college graduates at the bottom of the wage-and-ability distribution experience larger and more persistent losses, while for those at the top the effects are small and short-lived.
It’s not just salaries that take a hit. Recessions can harm an entire generation, as parents who take lower salaries have fewer educational opportunities for their children, leading to lower salaries when those children graduate (if they even go to college).
Economic recessions are often portrayed as short-term events. However, as a substantial body of economic literature shows, the consequences of high unemployment, falling incomes, and reduced economic activity can have lasting consequences.
For example, job loss and falling incomes can force families to delay or forgo a college education for their children. Frozen credit markets and depressed consumer spending can stop the creation of otherwise vibrant small businesses. Larger companies may delay or reduce spending on R&D.
In each of these cases, an economic recession can lead to “scarring” — that is, long-lasting damage to individuals’ economic situations and the economy more broadly. (emphasis added)
More research and more papers show that the initial decrease in salary due to starting your career in a recession can be disastrous for many.
As a 2009 graduate, I am well aware of this phenomenon, as I didn’t get a full-time job until seven months after I received my bachelors degree, and even then it was with a small company for a much smaller than anticipated salary.
The problem is that you can’t avoid graduating into a recession, unless you quickly change your plans and stay in school for another degree.
Otherwise, it’s just bad luck.
The problem we’re talking about today is that some people make their own bad luck by deciding on their own to settle for a lower salary.
What is the Ask Gap?
Like the research into lower salaries due to a recession, there is ample research on the lifetime effects of not negotiating a higher salary during job interviews.
Settling for a lower then expected/possible salary has the same lifelong, compound effects as graduating into the depths of a recession.
This “Ask Gap” is shown most blatantly in the salary difference between men and women.
…pay gaps at the start of a career compound. “Over time it builds up, because the percentage of raises is usually based on the base salary, so that accumulates over the years,” explains Zhaleh Semnani-Azad, a management professor at California State University, Northridge.
“So, this is where women do miss out long term.” Some researchers have estimated that a difference of $1,000 (£700) in starting salary could lead to a cumulative loss of a half-million dollars (£353k). (emphasis added)
This issue effects people of color as well, with the numbers showing lower average salaries for most non-white employees.
So what leads to the Ask Gap?
The short answer? Fear.
Women are afraid of the double backlash that’s lurking around every decision they make in a corporate environment.
If women conform to a gender stereotype, they risk
- being perceived as weak or incompetent, and
- not getting what they are pursuing (e.g. a higher salary)
If women don’t conform to a gender stereotype, they risk
- being perceived as too aggressive or masculine, and
- getting blacklisted by managers who didn’t like them asking.
It’s truly a situation of damned-if-you-do-and-damned-if-you-don’t.
How to Counter the Ask Gap
First and foremost; do your research.
Let me be clear on something: the gender stereotypes that women should be grateful for the salaries offered to them and not ask for more are complete bullshit. It’s wrong, sexist, and it actually harms people, companies, and the economy as a whole.
That being said, it’s not going to go away anytime soon, so women need to be prepared.
Do a deep dive into how much your position should make given your history, education, experience, location, company, etc.
All these things matter, and showing a highly defensible salary during your negotiation will take most of the wind out of the sails of the sexism you’ll be facing.
Second; believe in yourself.
Deep down, you know you’re worth the money. You just have to work past the societal pushback and ask for that salary. As one software engineer shared,
The message she got was that she should make herself uncomfortable in salary negotiations — or, as she puts it, to “ask for a number that makes me want to throw up”.
I realize that these are much easier said than done, but it’s a start.
Tap into your network and get some feedback on your salary request. Use LinkedIn to your advantage. Talk to HR. Google the hell out of the company and its employees’ salaries.
The Takeaway
This life is hard enough for anyone. Add in the toxic mix of historical gender expectations and outright sexism, and it can be downright soul-crushing.
Plus there’s the small fact that women were the majority of parents who left their jobs during the pandemic to care for their children.
The Ask Gap shouldn’t exist, and we should all work to eliminate it as quickly as possible. Until that day, women and minorities need to put in the extra time and effort to fighting for the appropriate salary
If you know what you’re worth, then go out and get what you’re worth.
This goes not only for new jobs, but also for your current job. During your annual interview, apply the briefcase technique and set specific, number-based goals for your raises.
Go get what you’re worth.
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This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.