In an economy that is reeling from the blows of both a pandemic and political upheaval, with the number of jobs available and the number of qualified applicants for those jobs less than evenly divided, salary negotiation might not be a top-of-mind topic for many people.
Yet despite the many economic difficulties confronting the country and world in the midst of mass chaos, not all salaries are shrinking. In fact, some are growing – and not just those of tech firm CEOs such as Jeff Bezos.
Moreover, the surge in unemployment, which in the United States is at its highest since the Great Depression, means that more people than ever are in search of a new job. Those who are fortunate enough to land an interview despite all the competition will face the challenging situation during salary negotiation with a company that might not be in a position of financial strength.
But how does one negotiate a salary that reflects your worth, and is still within the financial range of a company that is experiencing an economic downturn?
The Lockdown That Saved Lives, But Killed the Economy
First, let’s focus on what a “recession” means. This refers to a period in which the economy’s equilibrium is disrupted due to a series of extreme downfalls in the business cycle and in some instances, inflation.
In the case of 2020, the root cause is a virus that no one could have predicted. The resulting outbreak has forced local and federal governments to shut down the economy in the hope of containing and slowing the spread of COVID-19.
To clarify: a recession usually follows the end of a cycle of growth and development: the business cycle refers to the ups and downs of economic activity, as measured by gross domestic product, or GDP. Over time, these fluctuations indicate broad economic trends. When the cycle reaches a high point, it signals the beginning of a recession.
The most common sign of financial decline during a recession is the decline in business revenues and sometimes, the overall level of profitability. Recessions tend to come at a time when the economy is trying to recover from a bad loss, such as the loss of a big industry. Recession can also be triggered by increased spending, the availability of money, or both.
Avoiding Recession-Induced Salary Depression
These two common causes of recession are not unrelated, and when they coincide in an economy — as they often do during a recession — salary negotiation will be difficult. The problem occurs when the level of salary increases during a recession is too high compared to the employment market, leading to a negative feedback effect, whereby higher salaries translate into fewer employment opportunities.
When a recession strikes, it’s tempting to take the first job you find. But in doing so, you could easily shortchange yourself out of a salary that reflects your real market value, because employers can always pass you up for a more affordable candidate if they are still suffering economic shock or just want to save money by reaching for the bottom of the pool of applicants.
The pandemic and accompanying recession have severely shaken up the job market. Those who lost their jobs due to the shutdown may be unable to get their positions back, either because their former employers are still struggling or because their businesses no longer exist. Those that are hiring have access to a vast reserve of applications – this can be good for them, but challenging to job seekers, who face unprecedented competition.
You have two choices if you want to avoid getting deadlocked into a sub-par compensation: become a better negotiator, or move up a pay grade by using your transferable skills to acquire a higher-level position.
You can also combine the above, of course. Just be disciplined and keep your eye on your goals.
Beggars Can Be Choosers, Too
Even though right now is a strenuous time to be unemployed, that does not mean it is impossible to find a job – even one that meets your salary demands. There are methods you can use to overcome the disadvantages of unemployment and to improve your chances of getting hired during this period at a desirable price. You need to follow the process properly to succeed.
Stay-at-home and shelter-in-place orders necessitated by the pandemic have led to an increase in virtual job interviews. Triumphing at your next video interview is no more difficult than in a non-virtual setting, and should not be no more detrimental to your salary negotiation than the internet connection used to enable it.
It’s not an easy task to find a job in the midst of this pandemic, especially with the various industries/businesses suffering and closing down. During this period, you may be forced to choose between losing your home and your health care, or waiting until another period of time to improve your salary. Moreover, businesses may not have the financial capabilities to provide you with the salary you desire.
Observe which industries are flourishing during the pandemic. These are the businesses that will most likely thrive in the months and years to come. Once you have made up your mind about what kind of work best fits your short-term and long-term career goals within the constraints of a recession, make sure you understand the terms of employment and know the average salary range for the position and location. Take the necessary steps to persuade your prospective employer towards the higher end of the budgeted salary and you will be on your way to an illustrious new career.
What to Consider During a Salary Negotiation
It’s important to take into account your personal responsibilities. For example, taking care of your family and children during a recession can put additional pressure on your income, making it even more important to keep your current salary level and avoid asking for more money.
If you are not currently responsible for your family, you should be able to ask for the right amount of money to start up a new career. Never accept a job offer that seems too low, because you could lose out on a great opportunity.
Before you sign on the dotted line, investigate available employment opportunities to understand what might be available in the market. Also, keep an eye out for which jobs are most urgently needed. This will provide an angle for negotiating a higher salary and elevating your quality of life – even in the midst of a recession.
In sum, a recession presents challenges both to landing a job interview and obtaining a desirable salary. But with the right mindset and negotiation skills, you can – and will – succeed!