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  • Median vs. Mean Lawyer Salaries: Is Law School Worth It?

    A recent article in the Wall Street Journal (WSJ), "Hard Case: Job Market Wanes for U.S. Lawyers", reported on the large number of law school graduates suffering under large debt with surprisingly low salary prospects.

    If only these prospective law students had been reading this blog. They would have understood the difference between median and mean, and that only 10% of students can be in the 90th percentile of salaries :-)

    While the Wall Street Journal focused on the somewhat misleading marketing done by second tier law schools, in truth there is plenty of data available, e.g., from PayScale's research center, on just how low the typical median starting lawyer salaries are.

    In this post, I'll look at lawyers salaries: the top, the bottom, and the middle. Yes, for specific skill sets and employers, the attorney salaries are still good. That pay just is not the typical (median) law student's experience.

    Is your salary above or below the median for people like you? Find out with the PayScale Salary Calculator.

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  • Employee Wages: What is the Typical Wage in the USA?

    A couple of comments by readers got me thinking about typical wages again. In the process, I realized that even the federal government does not know what a "typical" worker in the United States earns.

    This came as a shock to me. With the frequent publication of average household income statistics, wage and salary reports, etc., by the Census Bureau, Bureau of Labor Statistics, Internal Revenue Service, Social Security Administration, and other federal agencies, I had assumed there was a well-defined typical annual wage.

    Here is a pop quiz: how much do you think the typical worker in the United States earns in a year? See if you are earning what is typical for your job by using the PayScale salary calculator.

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  • Misleading Average Salary Predictions: Your Pay Will Increase 3.6 Percent in 2007

    World at Work (the compensation professional organization) released recently a compensation budget survey by Compdata Surveys. The big news: the average preliminary pay increase budget is 3.65% for 2007!

    Broad averages like this drive me berserk. It is incredibly precise, but downplays the huge variations that affect individual companies and employees.

    There is nothing wrong with this average per se. The problem is how it is used. Companies often use average increases like this as a starting point for deciding what pay raises they will give individual employees.

    However, like pay, pay increases are determined by the interaction between the local labor market for specific jobs, individual employees' motivations, and a company's business plan. These microeconomic forces dramatically alter the pay increases a company will need to spend, in order to succeed, from what broad macroeconomic averages say.

    Companies are free to set pay increases by these broad averages. That is a business management decision. Of course, companies are also free to fail. :-)

    Local variations are what make capitalism fun. In this post, I will look at what data is available, and what forces drive salary increases.

    Are you making the most of microeconomic forces to earn what you are worth? Find out in a less than 5 minutes with the PayScale salary survey.

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  • Do only women choose quality of life over high salary?

    Some information came my way recently that got me thinking again about why women are paid less than men, on average, in the United States. See the PayScale aggregate hourly wage and average salary data for an example of the difference.

    I read the full American Association of University Women's (AAUW) study of the gender pay gap, "Behind the Pay Gap." While one can argue about whether the study actually finds evidence of apples to apples discrimination - that women are paid less when they do exactly the same job, with exactly the same qualifications as men - it is clear as day that men and women in the US choose very different education and career paths, and these lead to very different salaries.

    More info came in the form of comments from readers. One comment from a reader explained why going to Iraq makes sense for a guy trying to make a living as a truck driver. Other comments were by women on why they switched jobs in our article on changing careers. The stark difference in the relationship between work, money, and satisfaction expressed was telling.

    This got me wondering, do only women evaluate quality of life, or true "total compensation", when deciding on a job? Are guys stuck on a treadmill with only one measure of success, total wages earned?

    Are you maximizing your annual salary or living a balanced life? Find out with the PayScale salary calculator.

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  • Are PayScale Salary Reports Unbiased?

    Sometimes we are asked, are the PayScale salary reports unbiased? Since PayScale does not explicitly select the people who complete our salary survey, how do we know the ~2% of employees in the US who have completed our survey are representative of the US working population as a whole?

    The extent to which any aggregate statistic, like typical salary, is biased (inaccurate) depends on how it is constructed, and what question it is trying to answer. In this post, I'll look at three aspects of bias in reporting:

    • All aggregate statistics lie: There is no such thing as a "true" typical answer
    • The case of the civil engineer: Even well-measured typical values are wrong, simply because they are aggregates
    • Sampling bias: A sample may not be suitable for the question being asked

    In future posts, I will look at bias in government wage calculations, and then come back to whether PayScale data are biased for the questions we try to answer.

    Is your salary biased high or low? The PayScale Salary Calculator is a quick and easy way to compare positions. But when you want powerful salary data and comparisons customized for your exact position, be sure to build a complete profile by taking PayScale's full salary survey.

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  • CEO Salaries: PayScale in the New York Times

    I was excited to wake up today and see an article about PayScale in the New York Times. Together with a recent article in Business 2.0 magazine, PayScale has been getting very good press lately.

    As a person born just across the river in New Jersey, The New York Times has always represented the height of newspaper publishing to me. While it is great to be quoted in The Province (Vancouver, BC), seeing such a prominent article in the NYT says PayScale is real to my friends and family back east.

    While the New York Times article was fair in describing the strengths and weaknesses of PayScale and our competitors, one small item annoyed me. As regular readers will suspect, the issue of CEO salaries in New York City touched on my obsession with mean vs. median.

    Before reading another pedantic post on statistics, why not take a couple minutes to compare your salary using PayScale's salary calculator, as seen in the New York Times!

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  • Hourly Wage vs. Salary, Exempt vs. Non-Exempt

    Post by Dr. Al Lee, Payscale.com

    Most people in the US work force have the heard the terms “exempt” and “non-exempt,” but what do they mean? While many web sites talk about pay rate, there is not a whole lot of explanation regarding exempt and non-exempt status.

    While I am not a lawyer, or even an HR specialist, I am an employee, and also hopelessly curious about all things related to pay and employment. The basic law is that employers are required by the Fair Labor Standards Act (FLSA) to classify their employees as either exempt or non-exempt.

    The more I read about the meaning of "exempt" vs. "non-exempt", the more a lyric of the Paul Simon song "Train in the Distance" goes through my head, "...with disagreements about the meaning of a marriage contract, conversations hard and wild." Like a marriage, in the US an employee/employer relationship is governed by a little law, and a lot of social convention. Since much is not written down, misunderstandings are common.

    Before we delve into the details, why not check out where your salary fits into all of this controversy?  Find out with our ever-handy salary calculator.

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  • How Large a Salary Survey Sample is Enough? (II)

    In a previous post, I claimed that as few as 5 employee profiles are enough to report accurately on the typical pay for a job. How can that be?

    In this post, we'll look at how statistics work, and why a small, targeted, data set is often preferable to a much larger, but poorly characterized one. You don't even need fancy math to calculate this.

    If you are curious what kind of sample we have for your job, try the PayScale salary calculator.

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  • How Large a Salary Survey Sample is Enough?

    PayScale often receives questions about how many salary survey employee profiles we have.

    Our answer is we have enough, and the number is growing rapidly. :-)

    This begs the question, how large a salary survey data set is enough? How many data points are required for PayScale data to be truly significant? The number needed depends on what questions are being asked. In this post, I'll look at the questions the United States Bureau of Labor Statistics and PayScale typically ask, and the amount of data each needs to handle statistical fluctuations.

    You can experience our data techniques first-hand by trying the PayScale salary survey.

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  • Mean vs. Median Salary: Why was mean ever used? (Part III)

    In a previous post, we saw how time consuming it is to calculate with pencil and paper the median salary, or any median of a data set of more than a few data points.

    Even after computers became common in the 1950's, and could start doing the work, the mean still was used, because of one further nasty property of medians. Medians require retaining information about every value until the end of the period for which a median is calculated. It you want to know the median salary, you need to save every employee's salary.

    Means do not require nearly as much information. In the early days of computers, storing information was expensive, so the mean was still favored for "typical".

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  • Mean vs. Median salary: Why was mean ever used? (Part II)

    In the last post, I looked at how hard it was to calculate the median vs. the arithmetic mean ("average") to understand why we ever got in the mess of using mean salary to identify a typical annual salary. To make things simple, I used the example of counting checks and check sizes.

    Even for the small data set of 7 days and 15 checks, calculating the median number of checks per day and dollars per check was starting to get laborious. What if you were interested in these numbers for a whole year? How much harder is it to calculate medians vs. means for 365 days and ~750 checks?

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  • Mean vs. Median Salary: Why was mean ever used?

    In a previous post, I showed how the mean salary and median salary can be very different.

    The median is much better than the arithmetic mean for giving a “typical" annual salary; median is the method that we favor in our PayScale salary survey. In fact, the median is better for characterizing “typical” in almost any data set. So then why and how did the mean become the standard for “average” or “typical?”

    A Mean Mistake

    A historical accident caused the mean to be used for typical or average. Before the first personal computers were introduced, it was much easier to calculate the mean than the median. Scientists in the 1800's, when statistics was being developed, like today, were lazy (I speak from experience). Hence they settled on the easier, but less accurate, way of computing typical values.

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  • Average Salaries: Are they really highest in San Francisco?

    average salaries, median salary, average salary, median salaries, average salaries San Francisco, median salary San Francisco, average salary San Francisco, median salaries San Francisco, salary survey, San Francisco Recruiters, Fix It San Francisco, national median salary A recent article in the Portland Business Journal claims that average salaries in San Francisco are the highest in the country. Is this true? Does it pay to live in San Francisco? Is it really that bad a deal to live in Birmingham, Alabama, the place with the lowest average salaries?

    If you have read my earlier posts, you know to be skeptical about any statement about "median", "typical", or "average" salaries. This particular study reports on the median salary in each city for jobs that have a national median salary of $30,000. This was a little too vague for me, so I looked in the PayScale salary survey data for my own two typical jobs: Certified Public Accountant (CPA) and Registered Nurse (RN).

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  • Why is median better than mean for a typical salary?

    In a previous post, I commented that PayScale's Salary Survey preferentially reports typical salaries based on the median instead of the arithmetic mean (average).

    Why is the median better than the mean for measuring "typical" values? The best way to understand what is wrong with the mean is to look at how both behave in answering a simple question: how well have Stephon Marbury's Lincoln High School basketball teammates done in their careers in the last 10 years?

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  • Why is there no salary standard deviation on PayScale?

    I am sometimes asked, "why doesn't the PayScale Salary Report and Salary Research Center show the standard deviation of the data? (See Wikipedia for the (useless) mathematical definition of standard deviation.)

    People are are interested in the standard deviation, because it attempts to give the typical variation in salaries. The first thing they calculate with it is a typical range of salaries, by simply adding and subtracting it from the mean.

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  • Average Salary vs. Median Salary: Which should I use?

    In my second post, I gave the mathematical definitions of median and arithmetic mean (average). These were pretty useless, like all mathematical definitions, because I did not explain when to use median vs. mean.

    O.K., time for everyone to cringe: remember "word problems" from 4th grade mathematics? It turns out life is a word problem :-) A computer can do math calculations for you (including calculus), but computers are really bad at turning word problems into meaningful answers. A human has to decide which is the best equation to solve a word problem.

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  • Average salary vs. median: What's the difference?

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