Why Do Recruiters Lowball?

 After working with recruiters and receiving job offers, many people are disappointed with the salary offers they receive. This leads to the obvious question as to why recruiters lowball.

Are recruiters incentivized to lowball you on a job offer? And if so, is there any way to handle this.

Fist, in case you’re unfamiliar with the language, let’s define what a lowball offer is. Basically, it’s a salary offer that is lower than what you were expecting and in many cases it’s lower than what the company was advertising.

Why do recruiters lowball you if it’s not in their interest?

This is a good question, but first you have to clarify the basic terms about lowball offers and if recruiters do lowball.

Do Recruiters Lowball Offers?

Some recruiters do lowball offer you, while others don’t. There is no set standard that you can use to apply to all recruiters. It’s not a good idea to assume that a recruiter will or will not lowball you.

The important thing to determine is if you’re working with a recruiter for a permanent role or if you are negotiating for a temporary role.

That said, there are certainly recruiters that will lowball you on an offer. The reason that a recruiter will lowball you is that they want to close the deal immediately.

The only reason a recruiter would want to lowball you is that they simply want to fill the role. They would make less money by lowballing you on a job offer if this is for a direct hire role.

If this is for a temporary role, then there are more reasons why a recruiter would lowball you. In the case of a temporary role, the recruiter is often pressured by the staffing agency owners to lowball people on salary. The reasons for this are quite simple: profit.

There are two different types of job placements: temporary and permanent. You will be lowballed on all temporary placement roles (and these include temporary to permanent roles) and you might be lowballed by recruiters on permanent roles.

It helps to examine each in detail in order to better understand how each process differs and why you would be lowballed by a recruiter when working with either.

Would a Recruiter Lowball You for a Permanent Role?

While it’s possible that a recruiter would want to lowball you on a permanent role, it is not that common. The way in which a recruiter makes money when working on a permanent role is that they receive a percentage of the salary.

The recruiting firm normally receives a fee for placing a candidate. This fee can range from 10 to 30 percent of the persons salary. The recruiter than receives a percentage of that fee. This can range from 5% to 40%.

Obviously, it makes the most sense to negotiate the highest salary that is possible. The higher the amount of money that the require gets, the more money that they will receive in commission.

But there are slightly different things at play sometime. Perhaps the firm that the recruiter has set up interviews for is wavering about paying a high salary and would require some discussion. Many recruiters are instructed by their agency owners to simply sell the candidate on a low salary to close the deal.

It’s an issue of a sure thing vs a possible loss of offer. Look at it with these cold numbers:

The Company will offer the candidate 100k. The agency takes a 30 percent commission and the recruiter gets 40% of that number.

In this case, the recruiter can seal the deal and make: $9,000

If the candidate wanted 125k, then the recruiter can press the company to offer more. In some cases the company will fork over the extra 25k (plus the higher commission) but in many cases they will simply drop the candidate in favor for someone who is cheaper.

The risk here is for the recruiter to make: $11,250.

As you can see, many recruiters and most agencies (the agency nets 25-30k) will want to forgo any risk and take the guaranteed salary.

Why Do Recruiters Lowball for Temporary Roles?

When it comes to working on temporary roles, its even more common for a recruiter to lowball someone on a job. The reason that recruiters like to lowball people on job interviews for temporary roles is that the payment structure is very different.

The recruiter does not make much money, but the agency does. In most companies, the recruiter has no say in the amount of money a temporary worker is going to make. Even if the role is a temporary to permanent placement, the people who decide the payment terms are the businessmen and woman who run the company.

Many recruiting agencies and temp staffing firms are owned by businessmen who are not directly involved in day to day operations. In fact, many temporary staffing firms have businessmen set the labor rates and they never even meet or know the names of the people who work for the agency.

They set standard rates that the recruiters who work for them must follow. Recruiters don't take a cut of your salary, the agency charges a markup.

As we will see, the recruiters don’t make much money by lowballing someone, but the company does.

An administrative assistant is paid $14 an hour. The client is billed 35 an hour for their services. In this case the company makes $24 an hour (and nets around $20 after taxes and burden considerations).

The recruiter makes anywhere between 50 cents to 1 dollar and the agency makes $19.

If the recruiter negotiated the person to a lower rate of 13 an hour, their bottom line would not dramatically increase.

The agency owners and partners make the majority of the profit on temporary placements: ranging from 90-98% of the profit margin.

How Do You Respond To a Lowball Offer?

How do you respond to a lowball offer from a recruiter without making them mad? Should you ghost them? Should you send them an angry email?

Obviously it depends on the type of role: temp or perm. It also depends on the kind of industry that you’re working in.

If you are working with a recruiter and they are working for a client that has requested a temporary worker or even a temp to perm worker, then there is very little leeway. It’s not likely that you can negotiate with a recruiter on a temporary role. The recruiter is given clear directives by the agency owners on what they can pay people and the recruiter cannot deviate from these numbers.

If you are dealing with a permanent role, then there is more ability to negotiate. With these kinds of roles you are able to negotiate for a higher salary. If the recruiter comes back to you with an offer that you feel is a lowball then what you can do is politely tell them that it’s not up to your expectations.

If you have already discussed your expected salary with the recruiter, then they should know this and be aware that they are prepared to discuss this with you.

Most recruiters will call you to discuss the salary offering. They might call you to let you know the client rejected you, but they will also call you to let you know that you received the offer, so it’s not a sign to worry if a recruiter calls. It’s not always a case that a recruiter calling is a sign that you were rejected.

If the role is a temporary role, just make it clear that you have a set number you need and if they say they can’t meet that number, then there is little that can be done.

However, for long term roles, you do have leeway to negotiate and discuss salary with the recruiter. Send them an email, or phone call. Texting is not a preferred way to deal with recruiters and salary negotiations.

Should you Accept a Lowball Offer?

This is a question that only you can answer. It’s important to view every job offer as a potential source of work.
If you are desperate and need to work, then it might be in your best interest to accept a lowball offer.

Take for example a nurse who is looking for work.

A nurse might be offered a 3 day shift at a hospital. If this nurse is working in NYC, then the hourly pay rate might be anywhere from $60 - $140 an hour. Obviously that is a wide spread.

Many nurses might be offered a $60 an hour job but be angry that the recruiter won’t pay them more. However, what nurses are not aware of is that hospital pay rates are set in stone with agencies and recruiters have no ability to change them.

So, while a travel nurse might be eligible for $150 an hour due to a government funded emergency contract, local nurses would not always be eligible.

This is how you can have nurses on the same floor of a hospital making significantly different salaries.

If you are struggling to make ends meet and need to work, and you are an administrative assistant and are offered a $20 an hour role, then determine if that is enough for you to pay rent, buy food, and other items.

Sometimes people might want to tell a recruiter about another offer and think that this will make the recrutier raise the offer. It won't. In most cases recrutiters think that this is either a lie, or else they figure you are playing two companies against one another.