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Today my wife told me that she gets embarrassed when she is around and I try to haggle. I guess I can understand, I used to be like that too, and only over time have I grown bolder. With this in mind, I have to ask why is it that in America, money seems to be taboo?
In other cultures around the world, you are considered stupid or odd if you don’t talk money. In most parts of the world if you buy something without haggling the salesman will probably make fun of you for being a sucker as soon as you walk away. In America haggling is only considered acceptable in 3 scenarios. The first scenario is if you are buying something from a street vendor (like in New York), the second when you are buying something off of craigslist, and finally, haggling is OK when you are buying a big ticket item like a car or a house.
For some reason society has deemed it alright to negotiate and talk money in these scenarios, but if haggling is acceptable in these scenarios, why isn’t it acceptable in your daily spending? If just by asking for a discount you could get one would you go against this social norm?
I frequently go against this norm, it doesn’t always work, but when it does it feels great. Think about it from the salesman’s perspective, if 5% or 10% off will close the deal and allow them get on to helping the next customer why not? And if 10% off saves you $5 will it be worth the awkward moment? The worst thing that could happen is that they will say no.
Talking money does not only mean haggling, it means sharing your salary, something strictly forbidden in America.
In other cultures sharing your salary is not about bragging, it’s just normal everyday conversation. Xin Lu over at Wise Bread wrote a great post about how her Chinese culture influences her money habits. In the post she talks about how her father once helped a friend get a 20% raise, something that would not have been possible had they not been talking about salaries.
If by sharing your salary a friend could tell you that you are undervalued and try to help you get a higher salary is it OK? If you got a 20% raise I’m pretty sure you’d think so.
Recently I started a new job, and by talking about the offered salary and benefits of the job with someone else, that person helped me negotiate the offer I received to effectively be over 10% more than the original offer. Does it feel odd for me to know that someone else knows my salary? Yes a little, but the person who helped was glad to do it and I am extremely grateful to him for it. Sure, at the end of the day I was the one doing the negotiations, and yes, it was a bit awkward, but it was well worth it.
The point here is that Money shouldn’t be taboo. Not everyone is rich, and there is nothing wrong with that, but our culture has ingrained in us that money separates us and defines us. Nothing could be more wrong. Money is something that needs to be talked about by more people, finances cause people more stress than anything, and they are the number one cause for divorce; but if we would all be more open about money we might be able to help each other and it could all change.
Do you talk openly about money? Why or why not?
When I was in high school, I worked as a cashier at Sears Department Stores. I worked in clothing, and thus I was paid hourly and not on commission. When a customer tried to haggle, I simply refused them, as there was no benefit to me for making the sale (in fact, there was a disincentive: if I lowered the price on an item I could get fired). But in the appliances department, the salesmen were on commission, and thus were more willing to haggle. Of course, they did not have complete control of the price (if they lowered it too much, they could get fired or receive negative commission).
Also, I believe that everyone's salary in every industry should be publicly published. Why? Because this prevents discrimination. If a company were required to publish all salaries, it would become blatantly obvious if all the men were paid more than women, or if all the white people were paid more than blacks or Latinos, and companies would have a strong disincentive. Alternatively, if everyone keeps their salary a secret, the company can discriminate at will and no one will notice.
Consider the case of Lily Ledbetter, who worked at Goodyear Tire (this case was ruled on by the Supreme Court in 2008 and resulted in the passing of the Lily Ledbetter Fair Pay Act of 2009). For almost 20 years, she was discriminated against for being a woman (in the form of a lower paycheck than other male employees of the same rank and position), but she was unaware of it since all salaries were kept secret. She only found out when someone left an anonymous note in her office mailbox.
If the salaries were publicly published, the pay discrepancy would have been obvious from the get-go. But since salaries were secret, it took 19 years for her to know (and only then because someone in the know decided to tell her). To prevent this type of discrimination, I believe that all salaries from all companies should be publicly published, and available to anyone.
Like I said, haggling doesn't always work, but when it does it feels great. And yes it is very effective on larger scale items like washers/dryers, fridges, TVs...
On the Salary issue, I feel I need to clarify that I do not believe Salary should be talked about in the workplace (nor do I believe the employer should publish it). Outside of the workplace amongst friends, not co-workers is where I believe it should be discussed. As discussing in the workplace would create hostility between co-workers.
Great post Daniel. I too agree with you on the salary transparency idea. I do not discuss money with anyone unless I need advice and I really trust them. For example, a coworker of mine is making less than I do but has been around longer. I avoid all talk of salary with her b/c I'm afraid it might: a)put a strain on our relationship and b)cause unnecessary tension and issues with the company. The reasoning behind salary differences can be legit rather than always feeling as if they are based on discrimination. The reason for my raise was b/c my boss knew I was moving and understood how my costs would rise. But I doubt if anyone would ever think of something like that or even deem that a good enough reason. Money is a private issue b/c people can use it against you. Its one of those things that we have to be cautious about, in my opinion.
I wonder if salaries are a taboo here (the U.S.) because our social status is influenced by money more than in other countries.
It seems that social status in other countries depends more upon your place of birth, your religion, your school, or other social constructs (like the caste system in India).
But in America, you can make yourself into anyone you want to be. And it mostly depends upon how much money you earn.
So people may not discuss money, because they fear how they will be viewed by others, based upon their family income.
Salary is a tricky issue. It's all relative, and the reactions people will have will vary based on their situations. I've shared my salary and in one case someone acted surprised and jealous. I almost felt she was thinking I didn't deserve to make that much. In another case the person acted surprised, but for the opposite reason. He pointed out that I have a Master's degree and he knows people with high school diplomas making the same amount.
I wish salary was more openly discussed. If you don't know what people make, you don't know what to ask for. You don't know what you're worth, or if you're being taken advantage of.
In my first-ever job I asked for $22,000/year and they gave me $25,000. I was ecstatic because a friend had told me that type of job usually only paid $20,000. Well, it turns out his info was a decade old, and later I found out my co-worker made $30,000. Knowing I could've negotiated myself $5,000/year higher was so frustrating!
I really enjoyed this post and you bring up a lot of good examples where people do and don't discuss money. There is one scenario you omitted - the garage sale - where haggling is expected. I've been to many garage sales thanks to my brother as that's one of his hobbies. When I first started going with him to these garage sales I was embarrassed as sometimes he was asking for discounts of a quarter or two. Then I got used to it and actually while I don't usually bother unless it's at least a dollar off it is fun to either be in or watch the negotiation process. I'll also add that more people should be talking and negotiating health care costs with their doctor and insurance providers.
Interesting. This made me realize how infrequently I discuss money with friends. I think it has something to do with how much money is associated with our overall worth?
Terrific post, Scott! I was always raised that "It's not nice to talk about money." I never really thought about it until an interesting thing happened.
Early in my career I worked for a Fortune 500 company where management specifically directed employees not to discuss salary issues. This struck me as odd -- since (as you point out) there are already strong social taboos, why specifically create an institutional taboo? They were clearly worried about shared information.
So I asked around, sharing my theory that something was amiss, and several people opened up. It turned out that there was enormous -- huge! -- salary disparity among people with similar experience, similar time with the company, and similar performance reviews, who were doing the same job.
Buzz grew. Management became even more concerned. Buzz grew bigger. In the end, the company hired compensation consultants to establish market-competitive salary ranges for every position in the company. These ranges were made public and many people received substantial salary bumps.
It seems like a no-brainer that all public companies should publish salary ranges for every position. I agree that individual salaries are confidential information, but transparency regarding the range employees can expect to fall within, based on experience and merit, inspires trust and loyalty in both employees and customers -- which is just good business.
In Brazil people are more valued for the number of friends they have than their job title or salary, BUT talking about money, salary and how much you spend with X or Z is also taboo.
I don't think I agree with the assumptions on this article. There many people (like me) that feel awkward about haggling, even though in my country we don't think that money defines the people.
I think even talking salary amongst friends can be pretty awkward. I guess I've been on the lower end more than not, and it's painful to know when someone with less experience and less education than you is making a lot more. Especially when there's not much you can do about it. Yes, before you negotiate for a job that is great info to have. But after you start working for a company? I think if I used anyone else's salary as a justification for my own raise they'd probably think about firing me, the joys of living in an at will state. Or maybe they'd just tell me that whatever someone else makes does not justify why I should make more. Many times the person that makes more does so because of factors like luck, or good looks, or attitude. I think knowing has only made me envious of my friends and feel powerless. Maybe if you have the means to move to another company, or think your own company will tolerate your trying to negotiate for a raise than it helps, but most companies in this economy you accept what you have.
I know this is going off on a tangent, but I have to mention that I hate haggling too. I think that a like or dislike of haggling has less to do with your views on money, and more to do with your people skills and personality.
I, for example, like things to be in neat little categories. I do not like fuzzy logic. Haggling is all about fuzzy logic, since it deals with people skills and subterfuge and bluffing. Ick! I hate shopping for a new car. I don't mind so much shopping for houses, because the haggling is done through an intermediary (real estate agent). I do like buying from garage sales but I never haggle there. If something is too expensive, I walk away. It’s not worth the awkwardness of essentially telling someone “I think you are cheating me, give me a lower price or I’m walking”. How do people do that?
@Scott, That is where haggling gets a bad name. I've only told one person I though they were cheating me, and that was when negotiating for a car. Over half of the time I'm haggling for something I'm willing to buy it at the list price, I just like to see what I can save. But when I do haggle, I am very polite, get on the salesman/cashiers good side, and ask if there are any discounts available. And if I'm not willing to buy it at list price, I always buy if the give me a fair price. Never haggle then walk away.
Many times I make light of the situation as well. For instance one time at Sherwin Williams, I was being friendly with the guy and at checkout I asked "Do you have any sort of discounts? Like an I just graduated college, don't have a job, am getting married in a week, and I'm broke discount?" All of those things were true, he started laughing and said sure, I'll give you 30% off.
I wasn't begging, I didn't lie, I was just personable. It's all about the approach.
@Daniel: That probably why I could never run a business. I just can't understand how he could give you %30 off, and not do that for everyone.
If I'm going to sell something, I'm going to set a price that allows me to make a certain percentage of profit that I think is fair. That percentage does not change depending on the customer. Starving college students don't magically lower my expenses when they walk in the store, so why should my price change?
Since that is how I would set my prices if I were selling something, that is how I assume the seller has set his prices when I am the customer. For him to set the price higher, just to see who will be foolish enough to pay it while being able to give arbitrary discounts for those who haggle, seems inherently dishonest. So if I were to ask for a discount, then it's like I'm assuming he is being dishonest enough in his pricing to give me a discount, just for seeing through his trickery.
Anyway, that's why haggling makes me uncomfortable. And this is totally off the topic of the original post, so I apologize :)
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