Not So Fast, New Grads: What Newly Minted College Graduates Should Know About Their First Job Offer and the Compounding Effect of a Starting Salary

As this year’s crop of freshly-minted college graduates takes on the job market, pay equity software provider Trusaic encourages new job seekers to recognize the importance of early job offers – not just in the handshake moment but also for their influence on a lifetime’s career earnings.’

“Starting pay has been historically one of the biggest creators of pay inequity in the workplace, typically triggering consistently lower wages over an employee’s career span,” says Joanna Kim-Brunetti, Esq., Executive Vice President of Regulatory Affairs and Chief Legal Officer at Trusaic. “Multiple studies have shown a direct relationship between your first salary negotiation and the income you may earn over your lifetime.”

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Some researchers estimate that a difference of $1,000 in starting salary can translate into a loss of about half a million dollars over the course of a career. When an individual’s initial salary is low, it can compound over time, because employers historically have relied on previous salary earnings for determining new compensation offers. With 64% of job hunters accepting the first salary figure presented, and money worries leading four in 10 job seekers to accept the first job offer they receive, many workers may be derailing their earning potential right from the outset.

This cumulative effect is even more detrimental to women, who on average earn 18% less than their male counterparts. New data from the National Associations of Colleges and Employers (NACE) First Destinations Survey for the Class of 2020 shows that the wage gap between men and women starts right out of college. And it continues to increase over the span of a career, leaving women with a significant lifetime wage deficit relative to men.

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Because salary history information perpetuates the wage gap, more and more states are enacting salary history bans, which prevent the use of previous earnings in salary determination, in order to combat wage discrimination. However, these salary history bans do not prevent a job candidate from volunteering their prior salary information, which may be unintentionally or otherwise used against that job candidate for their starting offer.

Employers are looking to tools like Trusaic’s Equal Pay Estimator, which analyzes external and internal market data in real-time, helping ensure a fair compensation offer is made at the critical time of hire.

“The most effective way to advance pay and opportunity equity is to proactively stop pay inequities from ever getting a foothold,” says Kim-Brunetti. “Trusaic’s Equal Pay Estimator helps employers and candidates have confidence that all pay offers are equitable and competitive.”

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