Why is Your Current Value Determined by Your Last Salary?

"What is your current or past salary and/or compensation?" If you provide these figures, you lose bargaining power due to the prevailing logic that will be explained shortly. If you don't provide it, employers and/or clients may assume that you are hiding something or have a bad attitude. How should you handle this sensitive subject?

An Example from Athletes and Entertainers

If professional athletes, entertainers, and coaches allow the market to determine their earnings, why not use that same logic the next time you negotiate your salary or compensation agreement?

Do Employers Need to Know?

Why do employers need to even know your salary history? There used to be a time when asking such a question was deemed highly offensive. I never knew what my parents earned, and had sense enough not to ask. If you view salary as private and confidential, others should respect that position. Your integrity is not for sale; your talents are. A good response would be, "I respect your right to ask; however, my salary is private and confidential. If you hired me, I would maintain the same confidentiality in the future." If you say, "It's none of your business," that would not be helpful to your cause.

But what gives a stranger the right to know your current or past salary? Why do so many people provide this confidential information without objection? Perhaps the reason can be traced to the following: We believe the concept that your current worth, determined by another company, represents your future value to the next company. If you earned less than the market value, your future earnings will be unjustly penalized. If you earned more than the market rate, they may feel you cost too much. You may never be invited to an interview. Either way, you lose.

The Market Sets Your Value

You don't need to have an attitude, or display any arrogance. Some employers, clients, or recruiters may not know the market rates for your specific job. They may indicate a budgeted range for a position; however, it is your responsibility to show them any deviations from the market rates. (Please refer to the salary calculators below which are very helpful research tools). Or why your skill set is worth more value to a particular company. Because in the end, you are selling your unique value to their firm. Not your value from another company. If they still make you a low offer for your services, it should make your choice much easier. Smart companies recognize talent and pay for it.

Contrarian Examples

If an employer tries to determine your worth based upon your last salary, please consider using the following examples. These are my own ideas. Hopefully, they may clarify your position about the importance of market rates.

"If an NBA player coming out of high school or college has no salary history, why does he receive a guaranteed multi-million dollar contract? Based upon salary history, he should play for the league minimum wage. Most high school or college graduates are paid entry-level salaries since they have no work experience or significant salary histories. The NBA player is paid the market rate based on supply and demand for his skills."

"Have you ever gone to a restaurant, and when the time came for paying the bill, did the waiter or waitress ever ask: 'I need to know what you paid for your last meal. Then we'll know what to charge you?' "

These examples were originally published on Ask The Headhunter®.

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