Well, the OP mentioned that the recruiter thought the candidate was lying which is why they low-balled. So that explains the logic at least. They're not stupid, but they don't trust candidates I guess. Which is a whole different thing.
My understanding is that it IS common to lie, or else to redirect the conversation from what was made in the last position to what is desired for the new position. Why should it matter? You're being hired to fill a position that's worth x amount of compensation; the primary reason to ask for prior compensation seems to be to to get a "deal" (i.e., rob an employee of potential earnings).
There's no such thing as "worth X amount of compensation".
The way it's supposed to work is that you and your employer (who represents the capital) generate a return from your joint venture.
But the actual return is hard to predict. And there is no fair and obvious way to divvy up the return. So it comes down to negotiation power.
There also may not be any condition where you and the capital agree to join. The capital may have better options to generate a return and you may have better options to get a salary.
There is no shortage of ideas how to distribute profits, and no shortage of arguments which one is "fair" or which one is the best for whatever reason.
This particular scheme means you are paying janitors as much as people who went to school for a decade or more. Some people would not find that equitable and fair. Few academics would find that offer competitive.
And depriving the executives of large salaries also means you are increasing the incentive for corruption. If somebody has the power to squander a billion Dollar, you better pay her more than 100k.
And you forgot to include capital gains, or you included it with expenses. Whoever owns the equity will want some return, otherwise they will invest elsewhere (or not at all).
In my country there are very good statistics provided by the technical unions as to what compensation can be expected by region, technology domain, and seniority. I tend to quote those to set my salary and then argue up if need be.
Yeah, the recruiter told me the whole hiring team thought I was bullshitting about my salary.
It was a problematic company from the get go. I was cold called and the recruiter was very insistent. Their engineers were very unprofessional during the technical interview and complained A LOT about technical debt left by past co-workers during the interview.
Now, when I tell recruiters my minimum salary I refer recruiters to Glassdoor, just in case they doubt me.
I had that same experience interviewing with a startup in 1996, if you can believe it. They were looking at their "burn rate" by literally spending extra on airfare, but when I told them what I was earning, they said, "with that site?" No, doofuses, with my consulting; the site was just brochureware.
They didn't actually give me any answer until I asked them to give me one - then they said my attitude with the top management made it clear I wasn't a good candidate for the position.
The inevitable result of that is the people making bank will be sure to tell you, and ones making low salaries will not. The employer will therefore still know if you're making above or below the usual salary.
Businesses don't like risk (just like employees don't) and hiring a new person poses a lot of risk. It's expensive, and the employee may not work out at all. The more risk there is in hiring someone, the lower the salary offer will be to compensate. Salaries are a proxy for one's value when hiring. Removing that piece of information increases risk, and hence will lower the salary offers.
> The employer will therefore still know if you're making above or below the usual salary.
Thats still way better than being forced to give an exact number. Now the employer has to kinda sorta guess. Instead of getting underpaid by 30%, you might only get underpaid by 20%.
> The more an employer has to guess, the more risk there is in hiring someone.
An employees current salary is only barely correlated with a employees skill. They have a multitude of other, much much better factors that they can use to determine if someone is a "risk" or not.
> Also, if you wind up getting a salary that's more than you produce for the company
You are describing something that is close to impossible to measure, for the vast majority of situations. A company does not go around making exact measurements on programmers, and thinking to themselves "Is this person *really 18.2% more effective than the lower paid employee?".
Thats just not how it works. Instead, a person might be 3 times more effective, or half as effective, as the other employees, and salary will be almost entirely unrelated to how much they "produce", which can't really be measure very well anyway.
And this is without even getting into more complicated things, such as sunk costs, and the replacement costs. IE, you may be 10% less effective, but the costs to replace you are equal to 6 months of your salary, so in reality, it makes zero financial sense to do so.
And finally, you are ignoring the fact that an employee can just lie about their previous salary, and there is basically nothing the employer can do about this. I have never, in my life, had someone demand my tax returns, or call up a previous employer to verify my salary, and in many places this can even be illegal. I can just lie about my current salary, and easily get away with, as I have done so multiple times in the past, as well as has many other people that I know.
> I can just lie about my current salary, and easily get away with, as I have done so multiple times in the past, as well as has many other people that I know.
You're not fooling employers, they likely know you and your friends are lying, and discount the offer accordingly. Try bringing a paystub next time, your prospective employer will appreciate it. It's worked out well for me.
There have been some high profile cases of people who've worked for decades for a company, rose to the top echelon, and were discovered to have lied on their resume. They were out the door without their severance package.
> You're not fooling employers, they likely know you and your friends are lying, and discount the offer accordingly.
It's worked out pretty damn well for me and my friends, actually. I've gotten multiple 25% raises, each time by doing that. (Along with a healthy dose of job hopping)
> were discovered to have lied on their resume
I've never lied on my resume. Only about salaries, while talking to someone in negotiations.
That's just how the negotiation games goes. The employer makes blatant lies all the time in negotiations, also.
For the record, I've gone from a starting salary of 100k, when I just got out of college 6 years ago, to where I am today, which is 270k total comp, at a big 5 tech company.
I am pretty happy with those results. Especially so, because I've only ever considered myself to be an average engineer.
Or are you going to try and flatter me by saying that I could have been doing even better than going from 100k to 270k in 6 years? Perhaps. But I'd hardly say that I haven't done alright for myself.
> The employer makes blatant lies all the time in negotiations, also.
I've heard such justifications for submitting fraudulent college applications, cheating in college, doping in sports, etc.
I've done significantly better than my peers with salaries, without lying about it.
Remember that fable about Steve Jobs' dad painting the back of the fence that no one would ever see? My father once told me that honor is what separates men from animals. Honor is what you do when nobody is looking. How much is your honor worth to you? I'm no saint, but wanting my father to be proud of me is worth a lot to me, even though he's passed away.
Actually if you work a while and are lucky enough to have done well, you may want to pick a place to work for reasons other than it has the highest salary. In that case you may not want to advertise your salary history because it can scare away employers. It shouldn’t but it does.
Because experience is a very weak signal and skills are hard to quantify and extremely hard to measure in the relative brevity of the interview process.
There are obviously problems with a reliance on salary as a signal of quality/value produced. But I don't understand the impulse to pretend that there isn't nontrivial signal in a previous salary.
There are now services like Equifax Workforce Solutions and The Work Number (and another I can't remember) that records this information for inquiry by future employers. If you have third-party payroll your salary info is almost certainly reported to such a bureau.
> Their engineers were very unprofessional during the technical interview and complained A LOT about technical debt left by past co-workers during the interview.
That was them just warning you: "Dude you won't hear it fom HR and I am not allowed to tell you directly but you most likely don't want this job."
The OP also mentioned the offer was below the average market price for somenone with a similar work experience, which is simply absurd if their goal is to entice you away from your current job.
Which means that they haven't done the bare minimum research into the position, they hired incompetent people, or they themselves are incompetent. None of these options really screams good place to work.
