We at PayScale recently released the Q4 2010 results for the PayScale Index. See a previous blog post describing the Index and another one that compares the PayScale Index to other common measures of labor market health.
However, a common question posed by our readers in response to our release was, "What is an Index?" Or in other words, "What do the numerical values actually measure?"
In simple terms, an index tracks changes in a variable from some baseline time period. In terms of the PayScale Index, the variable we are tracking is the total cash compensation for full-time private industry employees in the U.S and the baseline year is 2006.
In this post I will further discuss what an index measures, how it is calculated and compare the PayScale Index to another commonly used index, the Consumer Price Index (CPI).
Understanding how we measure changes in compensation over time is interesting, but so is understanding your place in the current labor market. Find out where you are with a free PayScale salary report.