How do I respond to an extreme low ball salary offer?
March 15, 2013 4:45 PM   Subscribe

I am a casual employee who has been offered a permanent position, but the proposed salary is well below what I was expecting, and I am unsure how to respond.

I have a casual job that I enjoy for a variety of reasons, chiefly because it is fairly low stress and affords me a great dea of flexibility. Lets say it is weighing widgets. I drive my own car to various locations to weigh the widgets, and then send this information to another individual who converts it into a form that is presented to the client. I charge my employer on a job by job basis, depending on the size of the widget. There are a few people employed by my organisation on a casual basis to do this job, and one person employed full time. I am not reimbursed for travel costs or for job related material expenses, nor do I get sick leave or holiday pay.

The job pays ok, and I currently work around 20 - 30 hours a week doing it. I took this job in part to get away from being in front of a computer and I also love that I do not have to go into the office much, which is a bonus because the office is in an inconvenient location on the edge of the city, with no parking. During busy months I can bill them quite a bit, but this is balanced by the slow months where I might make a couple of hundred dollars total. I am ok with this.

My employer offered me a permanent position, which I was interested in for the added security. To take the offer I would need to agree to a 36 hour 4 day week, and travel in to the office every day to take over some of the computer based administrative tasks that I am not currently responsible for.

They sent the salary offer through by email yesterday evening, and it is really low. Insultingly low. Barely more than minimum wage and about two thirds what I would currently bill them for around 20 hours of work. I would get holiday and sick leave. They would also pay me a travel allowance, but this would not cover travel to and from the office itself and would amount to maybe an extra $100 a week, most of which would go on petrol anyway.

I just do not know how to respond to this, beyond my initial reaction which is "hahahahaha, NO". My fear is that if I turn down the offer I will be out of a job anyway, and also that if I go into negotiations with my current (hoppingly mad) mindset I will completely sour the relationship I have with my employer. I just don't know where to start when a counter offer with what I think is reasonable is so far above what was offered it is going to look like a joke.

I have no idea if this salary is based on what they are currently paying the full time employee, but I suspect it is. I get that they are running a business and from their perspective they could in theory train a student to do what I do in about 2 weeks. They may think they pay me way too much, but hey, they did agree to my rates when they hired me. I also get that they need me to take over some of the administrative work, which I am happy to do but I would like to be fairly compensated for my time.

The obvious answer is get another job, and I will be looking. However I would like a chance to come up with a solution that works for both of us. Help?
posted by anonymous to Work & Money (26 answers total) 2 users marked this as a favorite
Are there other benefits? Such as Health Insurance?

Are they now paying for what previous might have been something you owed under a 1099 basis? (self-employment tax?)
posted by bottlebrushtree at 4:49 PM on March 15, 2013

Bottlebrushtree, health insurance and payroll tax do not make up for such a drastic pay cut.

Is it possible that they don't realize that their offer is so off what the OP already makes? Maybe they made a mistake?

Otherwise, ugh. Sorry.
posted by ablazingsaddle at 4:56 PM on March 15, 2013

Barely more than minimum wage and about two thirds what I would currently bill them for around 20 hours of work. I would get holiday and sick leave

How about health insurance? Any other benefits besides the travel pay? Why do they think you would take a job doing more work for way less money? There's nothing about this that makes sense. And, if I'm understanding correctly, they are the ones that out-of-the-blue offered you a permanent position? If that's the case, my guess is that they don't want to pay you any more for your contract work. I would go ahead and give them a counteroffer roughly based off of your current billables and your understanding of the responsibilities involved with the permanent position. You'd be silly not to. My guess is that they will balk and then shortly after that cut you loose from the part time work.

The only other option I can imagine is that it was a total mistake. (Woops, left off a zero).
posted by murfed13 at 4:58 PM on March 15, 2013 [2 favorites]

It sounds like you're not super well-compensated now, but the freedom is worth it. They're offering to reduce the freedom and not raise your compensation (unless there's a really stellar benefits package, which in the US would be a major concern; based on your use of the word "petrol", though, I suspect you live in a civilized country where health insurance isn't a bargaining chip.)

If it were me, I'd start looking for other work just in case, but I'd reply to them and say "this offer isn't competitive with what I currently make. Sorry." And I'd let them respond - they'll either say "Well, it's all we can afford" which, well, that's not your problem and you shouldn't make it your problem, or they'll counteroffer. You don't need to propose a number - they know what you bill.
posted by restless_nomad at 5:00 PM on March 15, 2013 [13 favorites]

It is not uncommon for salaried offers to be lower than what you make freelance doing the exact same thing. My suggestion? Negotiate. Let them know what you need.
posted by phaedon at 5:00 PM on March 15, 2013

Just take the emotion out f it. Don't take it personally. Business is business. "Sorry, I won't be able to consider a change in my responsibilities unless the salary is closer to $x. If that won't work out, I look forward to continuing our present arrangement."
posted by bq at 5:03 PM on March 15, 2013 [27 favorites]

THE ONLY WAY TO JUDGE ANY OFFER is to convert both offers -- your current one and your new one -- into a common currency, and then compare. IMO the best currency is actual $ earned for an actual hour worked, but it's not the only one.

Tallying up income per hour is easy. But you also need to put a $ value on vacation, etc. And break down travel costs. And value less tangible things, like stress, proximity, flexibility, etc.

It gets a little complicated, but it's not rocket science. Say, for example, that one offer includes a gym membership, which depending on your circumstances could be significant. BUT if you already have a lifetime membership at a better gym, that component of the offer is worth exactly zero. That's just an example -- the point is that every offer has its own oddities. (I'm guessing you're in a country with a national health plan, which takes one big complexity out of the equation.)

Do you do your own taxes? A regular employee (called W2 in the US, for the tax withholding form) has it a little easier than a consultant. On the other hand, the complexity of the tax code is exaggerated.

I learned how to do this in Detroit ~1997, when I had many opportunities as a freelancer, contractor, consultant, and regular employee. A book on technical writing laid it out -- I'll see if I can find it for you. But it all came down to a spreadsheet. I called mine ApplesToApples.xls.

Good luck!
posted by LonnieK at 5:19 PM on March 15, 2013 [1 favorite]

There's nothing about this that makes sense.

I think, as the OP references, it makes all kinds of sense for the company. They feel they're paying too much for what the OP is doing, so they're offering a permanent position, but at a lower rate. If the OP doesn't accept that offer, they may have someone else do it. The only way to really test that is to try to get a higher wage for the job offer and find out if what they're really giving is an ultimatum.
posted by LionIndex at 5:25 PM on March 15, 2013

Mod note: From the OP:
Thanks for the responses everyone, especially the advice not to take it personally (which I am admittedly finding it hard to do, but I'm working on it).

To clarify, there are no other benefits included in the package, or anything extra that would be covered by the employer that isn't covered now. Health insurance is not a bargaining chip here. The offer does not include the employers contribution to my superannuation account, which would be on top of the amount named. However this would still not bring it anywhere close to in line with what I am currently making.

In the process of looking for other positions, and I have just discovered my employer is advertising for someone to fulfil the same position he has offered me. I'm not thinking I am in a strong position here :/
posted by restless_nomad (staff) at 5:32 PM on March 15, 2013

I was in a similar position recently. I was offered such ridiculously low pay that it was insulting to me as a human. This would have been to continue a project that I had already started, when my funding from the original source ran out.

Here is what I did.

First I tried to negotiate. I did this by the books in a polite and professional way. It didn't work. I didn't make any threats. I referenced comparable pay rates that others in comparable institutions had gotten. I was told there was no funding.

I gave it thought over a few weeks, and decided to keep working on the project. I found a part-time job in order to support myself while I finished the work. I had to grit my teeth and ignore my seething anger, and the insult of the situation. Why did I do it?

The reason was for the intangible long term benefits to my career. Small stuff like having an email address from my institution, and a role there, even unpaid, is worth a lot for networking. It puts me in a strong position to be able to wear a suit to work every day and to be working on super exciting, awesome things, with high powered people, even if I am not being paid much right now. Plus, finishing my own project is good for me -- and my resume -- in the long term. This is a matter of personal work integrity.

What I did was to put my emotions aside entirely, and take a long view of what would be best for me in the long run. I considered whether I am lowering myself by accepting a low-ball offer. I didn't want that to be a precedent.

I am confident that I made the right choice. When I go into work right now, nobody there knows how much I am being paid. All they see is that I'm dressed like a rockstar, super competent, and doing awesome work. It feels good to be part of that, and I am (for the short term) making enough to live. I have a longer term plan to make a lot more, and this is a stepping stone to that.

Also, in this new configuration, I have a lot more freedom than I did before. That is great.

So the TL;DR answer is (or was, for me): put your emotions aside and consider very frankly what the value is of the offer, and what your other options are, and what the impact is on your personal goals and career. Make this a logical and not emotional decision. I was in your position about a month ago, and I was truly seeing red. I couldn't even look at my boss. I can confidently say that now, a month later, the emotions dissipated and I'm glad that I made the right choice for my longer term career.
posted by htid at 5:37 PM on March 15, 2013 [2 favorites]

I get that they are running a business and from their perspective they could in theory train a student to do what I do in about 2 weeks. They may think they pay me way too much, but hey, they did agree to my rates when they hired me.

You can't shrug this off. If they can hire someone to do the work just as well for less money overall then that's pretty much the ball game. Your current arrangement might simply have stopped making sense for them.

During busy months I can bill them quite a bit, but this is balanced by the slow months where I might make a couple of hundred dollars total. I am ok with this.

My guess is that they've been paying you a premium for your flexibility, but they've realized that they no longer need that flexibility and aren't willing to continue paying for it.
posted by jon1270 at 5:48 PM on March 15, 2013 [3 favorites]

Where I work, the official policy is that casual staff are paid at 1.3 times the rate of a permanent position for the same work. (I am in Australia and I think that's pretty standard here. Like in your situation there's no difference in employer-paid superannuation or taxes, and health care is irrelevant. So I think the pay differential is about making up for the fact that an employee piecing together a career out of casual work will have gaps in employment, or lighter weeks/months.)

So a salary offer at 2/3 of what you were paid as casual doesn't seem surprising to me. If the actual amount is insultingly low, that probably means you are also being paid very low for your current casual work.

I would try to negotiate, but recognising that you probably won't be able to negotiate up by more than about 10%. So if that won't be enough to make you happy, it's time to try and talk about staying in your current casual arrangement, or to find another job.
posted by lollusc at 6:57 PM on March 15, 2013

You could simply respond by asking them how they arrived at their figure. Nothing else -- say you're considering it and want to know the above. Let them explain it, for round 1.
posted by Philemon at 7:12 PM on March 15, 2013 [2 favorites]

Are you considered an independent contractor right now? If you're a part-time employee, yes, this offer isn't great. Like lollusc says, part-time and/or non-salaried staff get a bit of a bump because of the hours.

If you're a contractor, then it's probably in line as contractors bill high (should be double, really) to cover overhead costs. Being a full time employee presumably removes these costs.

When pricing out the cost benefit of this offer, consider the quality of life that comes with fewer hours with the firm.
posted by smirkette at 7:16 PM on March 15, 2013

I'm not surprised. I've been witness to a similar thing where the contractor was paid X amount and was offered a much lower salary (though it came with benefits). He didn't take it, and subsequently had his contracting hours cut -- because the company had more money budgeted for employees than contractors and they cut contracting hours but did not cut employee hours. You may be able to negotiate continuing as a contractor, but they may not have the money for it. That doesn't mean they'll stop having you work immediately, or completely, but there is just more security in being an actual employee. Consider all positives and negatives (benefits, vacation, sick time, security, total income, etc.), and consider how easily you can walk away from them and get paid elsewhere. If you're on decently good terms with them, find out what the deal is and/or negotiate.
posted by DoubleLune at 7:41 PM on March 15, 2013

Mod note: From the OP:
I just want to clarify a couple of points and then I will stop thread sitting, promise.

After working it out, the offer is not 2/3 of my current rate. I break it down to hourly numbers they have offered me about half of what I currently earn. While the work is not that hard to pick up, it is is fairly specialised and market rate for the additional tasks they are proposing I take on is also above what they are proposing.

I have replied to the email asking if there is room for negotiation. I'll see what they come back with but in the meantime I am polishing my resume. Thank you so much for the responses, they really have helped clear my emotions out of it.
posted by restless_nomad (staff) at 8:13 PM on March 15, 2013

Mod note: From the OP:
Oops, sorry, to clarify I am also not considered a contractor, but a casual part time employee.
posted by restless_nomad (staff) at 8:16 PM on March 15, 2013

anonymous posted">> To take the offer I would need to agree to a 36 hour 4 day week, and travel in to the office every day

When you politely decline their offer, blame this. You can blame vague "other personal/family/professional responsibilities" that preclude the commute and set schedule, etc.
posted by desuetude at 9:23 PM on March 15, 2013

Are you paid on a 1099? If so, maybe your employer is thinking inline with this recent ask.metafilter post:

How to calculate self-employed income equivalent to employee pay?

posted by tinker at 9:51 PM on March 15, 2013

"I'm sorry, it's not enough," and if they press you, tell them it's half what you currently make. You have hard numbers to back this up, don't be afraid to use them, just hold out until they (effectively) ask for them. It's about the money, be straight up with them. Don't give them a target number, though, just tell them it's not enough and have them offer again if they want to and see where it comes out. But really, don't they have to know all this already before they made you an offer? I'm assuming they aren't idiots.

Do you get insurance or anything extra on the permanent side of things?
posted by rhizome at 1:09 AM on March 16, 2013

"I'm flattered that you want me to work full time, Joe. I can't afford to at that rate. I hope this doesn't affect my current relationship with XXX Corp because I really like doing this and prefer my current arrangement. It makes better economic sense for me."

Silence. Wait for a response. Then wait some more. Say less rather than more.

In case you don't know this, the only way to negotiate is to be willing to leave. Start looking immediately and be prepared to scoot if you have to, and indeed, if you can find something better, make it happen.

If your job is as simple as you suggest, you are easily replaceable anyway. That's not a comfortable place to be and suggests this is the universe giving you some advance notice. No one else is going to take care of you, amigo. Your REAL job is taking care of yourself, not working for these folks.
posted by FauxScot at 1:46 AM on March 16, 2013 [5 favorites]

I think that you cannot neglect the fact that it is similar to the other full-time employee's pay. They may be trying to avoid internal problems, like other employees leaving because you are paid higher, or other employees asking for raises.
posted by corb at 7:53 AM on March 16, 2013

Some companies will be willing to reveal the pay bands for various levels. Asking them to first reveal how they arrived at their offer may get them to reveal this to you.

If so, you could request a higher title, for example, that would bump you to the next pay band. Or ask them to come back with an offer at the high end of the current pay band, which you justify with your experience.

I would start there, if it were me, without even directly revealing at the outset that I think the offer's way too low. Make them swear about their process for the first round and insist on more info about their process. This gives you a *practical* basis in which to bargain.

Of course, they may well reveal unintentionally that they pulled the number out if thin air or with an idea to cut costs. Get them to admit it and then you have a chance to work them to see that you can offer them something that's worth it to them.
posted by Philemon at 8:29 AM on March 16, 2013

I had a similar thing happen to me a few years back (except I was a contract employee on a seemingly never-ending contract) where the permanent position was about 2/3 of my then hourly wage but included insurance and vacation days. There was no room for negotiation and they told me that some of it had to do with the allocated budget and some of it had to do with that being the standard wage for that other position/I was being paid more as a contract worker since I didn't get vacation days, etc.

I took a token few days or a week to think about it and then declined the offer. I told my boss that while I was appreciative of the offer, the compensation was unfortunately not enough and that I actually preferred my current position anyway (both true).

The company was disappointed but not insulted (or surprised) and they let me know that they'd be maintaining my contract.

Which they did until I quit for a better paying job a couple months later.
posted by sm1tten at 11:09 AM on March 16, 2013

Assume that they have made an error in math. That will help you stay good-natured. List the reasons you are excellent at this job, and counter-offer on the pay. Be positive, cordial and cheerful, but not in a candyass way. Before negotiating, decide if you want the job, and what the lowest acceptable pay rate is, and what you think it should be. Good luck.
posted by theora55 at 3:32 PM on March 16, 2013

One of the key points that anon has made clear only through word choice is that this is likely an Australian jurisdiction.

It sounds like they have plenty of work to go around if they have a freelance workforce. A failed negotiation doesn't mean they have less work for you, or fewer clients, or more employees. You're just as replacable today as you were yesterday, yet they haven't done so. From that perspective, nothing's changed, so they have no reason to let you go.

As for why they'd offer a low salary? I'm guessing they view backoffice work as interchangable cogs, or a consolation prize for valued employees injured to the point they can no longer do their old job. Or your field job is so highly paid that calculating a new salary on the weighted sum of hours spent lowers your wage; effectively diluting your hourly wage. There's also the fact that the risk of less work to go around is now on the employer instead of you.

Since you're comfortable with the status quo, I'd find a way to decline, ala FauxScot's suggestion. The best case scenario in that situation is they continue their search, and make you a new offer in a week or two. The worst case scenario here is they want to give you an ultimatum, but let them make it explicit!
posted by pwnguin at 4:22 PM on March 16, 2013

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