A new hire only gets one chance to negotiate: a brief window between the time that an offer is made and the time when that offer is accepted. Those initial terms and conditions determine the employee's salary for years to come - possibly the entire the duration of his or her time at the institution.
Think of a graph with job tenure (years of service) on the horizontal axis, salary on the vertical, and a curve showing the evolution of a person's salary over time. Roughly speaking, the intercept of that curve is negotiable, and the slope is, if not entirely fixed, at least largely independent of a person's initial starting salary (for references, see here).
An extra $100 in starting salary means an extra $100 in salary each and every year - until one jumps to a different pay scale, gets a salary-boosting outside offer, or hits a salary ceiling - none of which may ever happen. Hence, If one is offered a job, it is critically important to negotiate.
This is how I visualize negotiations:
Each party to the negotiations is trying to pull the bargaining outcome in their direction, to appropriate a greater share of the surplus. The question is: how?
The best way to get a good offer is to have a good fall-back position. But what if there are no other offers on the table, and the fall-back position is working at Starbucks?
A poor outside offer shifts the "employee's fall-back position" line to the left, and typically results in a lower salary. But regardless of ones fall-back position, sometimes just asking for more money actually works. A friend tells the story of her negotiations with her Dean "I had hoped my starting salary would be a little higher than this." "I can only go up by $500." "O.k., I'll take the $500."
[Update: in the comments, some people have suggested that negotiation is futile. The scope for negotiation is a function of the uniqueness of the employee. For a job such as flipping hamburgers, which can be done perfectly adequately by a significant segment of the Canadian population, any one individual is easily replaced, the employer's fall-back position is high. For a job such as NHL goalie, where only a few dozen people in the entire world have the requisite skill set, and the job is vital to the team's success, the employer's fall-back position is low, and the individual has more scope for negotiation. This post is mostly applicable to jobs somewhere between these two extremes.]
It helps, when requesting more money, to justify that request, emphasizing the positive. "Given that I have X years of experience..." or "Given that I am in a high demand field.." There are books with titles like "Getting to Yes", "Radical Collaboration," or "Negotiation Speak" that one can read which are full of helpful suggestions.
It also pays to do background research. The collective agreements for most universities are available on-line. One graduate was very pleased with the offer he had received - until he looked at the university's collective agreement on-line, and discovered that the offer was right at the bottom of the pay scale. He argued that he was better than that, and the university agreed.
There is also a wealth of information on-line about professorial salaries - all Ontario salaries over $100,000 are published here, all BC salaries over $75,000 are published here, and the Canadian Association of University Teachers provides a very useful almanac with average salaries for each rank by university and by field. According to the CAUT almanac, the average salary of an Assistant Professor in Economics is $101,000. Suddenly that offer of $70,000 doesn't sound so good, does it?
This publicly available salary information has to be used with caution, however. Many current professors negotiated their salaries armed with outside offers from US schools when the Canadian dollar was trading at 65 or 70 cents US. Now that the Canadian dollar is at par, and US schools are facing financial issues, those kinds of outside offers are rare. Many Canadian universities are facing financial challenges, too. When the Dean says "I'm sorry, there is no more money available" he may be speaking the truth.
In a tight fiscal climate, it may be more fruitful to look for other areas for negotiation. When I first started teaching at Carleton, I was asked to teach the third year public finance course. I'm still teaching it. In all probability, I will be teaching it until I retire. It is critical to get at least one good course during ones first year of teaching, and to avoid getting any truly dire courses. That initial course allocation may be with you for life, so it's worth talking about it with the chair. Other things people negotiate over are start-up research grants and the first year course release.
People who are hired during tough job markets earn lower salaries than people who are hired in good job markets. It may rankle that the useless person next door is paid $10,000 a year more, but generally speaking the only way of addressing that inequity is to get an outside offer. Or just let it go, and enjoy life.