How does your pay stack up? If you’re like most people, you don’t know the answer.
A few years ago, PayScale surveyed 71,000 employees to learn more about the relationship between pay and employee engagement. Unsurprisingly, our findings showed that how people feel about their pay has a big impact on how engaged they are at work. Sixty percent of those who said they were underpaid intended to leave their company, compared with 39% of workers who felt they were paid more than market rate. (For the updated data, see PayScale’s report, What You Can Do to Improve Employee Engagement and Retention.)
But perhaps more surprisingly, our research also showed that most people have no idea how their pay stacks up against that of their coworkers and peers at other companies. In fact, two-thirds of respondents who were paid market rate thought they were underpaid. In other words, most people think they’re underpaid — and many of those folks are wrong, at least according to market data.
So how does your pay stack up, really? To get an accurate answer to your question, first you have to understand why it’s so hard to get real information about your salary in the first place.
Why You Don’t Know How Your Pay Compares
1. Some Companies Discourage Talking About Salary
Have you ever worked for an employer that forbid salary discussion among employees? If so, it’s likely that they broke the law.
“The 1935 National Labor Relations Act specifically indicates that employees have the right to engage in ‘concerted activities for the purpose of collective bargaining or other mutual aid or protection,’” says David Reischer, a lawyer and CEO of LawyerReviews.com, in an interview with Monster.com. “Employers are not allowed to establish ‘pay secrecy’ policies or use a nondisclosure agreement to prevent employees from discussing their compensation.”
However, there are plenty of ways besides an official policy to discourage workers from comparing salaries. Over the course of my career, I’ve heard several managers suggest that employees refrain from comparing the pay to avoid creating tension among coworkers. Is that the best way to make workers feel better about their pay? Absolutely not. But it happens and when it does, it can make it uncomfortable for employees, no matter how their pay compares.
(Note: even hinting around that employees should refrain from discussing pay may rise to the level of illegality, according to this NYU law professor. But consult with an employment lawyer if you have questions about your specific situation.)
2. Anecdotes Do Not Equal Data
But let’s say your organization understands that pay secrecy is the wrong approach. Perhaps they even understand that communicating about pay is important, and make an effort to explain to employees not only how their pay is determined, but also how they can get a raise. But unless your organization is unusually committed to pay transparency, you won’t have a view into how your pay stacks up against your coworkers.
According to PayScale’s Compensation Best Practices Report, only 36% of employers share pay ranges with their employees. As a result, most don’t know where they stand in relation to their peers, or where they can go in terms of future compensation.
In that environment, what do people typically do? Ask their coworkers how much they’re earning. But the problem with going on hearsay is that you have no way of knowing whether you’re getting the whole, unvarnished truth. One less-than-honest coworker could tell you a fish story that wrecks your trust in your employer for good.
3. It’s Hard to Compare Apples to Apples
But even if everyone you speak with is honest about how much they’re making, you’re still not going to get the full picture. Why? Because again, most companies don’t do a good job of communicating with workers about why they’re paid as they are.
Let’s say you get into a conversation with your colleague about pay. You find out that your coworker, who has the same job title and has been with the organization for a similar amount of time, earns $5,000 a year more than you do. Understandably, your first reaction would be anger. Why are you earning less for doing the same job?
But although it’s possible you’re getting ripped off, it’s also possible that your colleague has skills or certifications that you don’t know about. If you were comparing resumes as well as compensation, you might notice that she has qualifications that you don’t yet have. (And not to belabor a point, but if your manager would tell you which qualifications lead to better pay, you wouldn’t have to guess.)
How Does Your Pay Stack Up, Really? Here’s How to Tell
1. Take the PayScale Salary Survey
To truly compare apples to apples, you need more than just insight into what your coworkers are earning. You need to know what other people with your job title, education and experience earn at other companies in your area.
That’s where PayScale’s Salary Survey can help. The largest real-time salary survey in the world, our survey adds over 150,000 new records a month. Answer a few questions about your background, occupation and skill set, and you’ll get a free salary report that compares your earnings to that of thousands of your peers. (Learn more about our methodology, here.)
2. Look for Ways to Boost Your Pay
Once you take the survey, you can experiment with adding skills or additional education that might raise your pay. When your goal is to get a raise, it’s obviously important to know which qualifications will make the biggest impact.
Further, you might be surprised to learn that some skills can have a negative impact on pay for some job titles. For example, PayScale’s survey found that Microsoft Office skills had were associated with lower pay for data scientists and data analysts.
“In our skills framework, these are assumed skills for data analysts and data scientists,” explains PayScale economist Teresa Perez. “While data analysts and data scientists may spend most of their day plugging away in SQL or Python, they are still expected to know how to make a pivot table in Excel. In short, Excel is to data analysts and data scientists what pouring milk into a pitcher is to baristas.”
She continues, “It is not that Excel is not useful for them. It is not that Excel is not needed by them. It is that high-skilled data analysts and data scientists report other, higher paying skills. Lower skilled workers can be expected to make lower salaries, and the negative premium reflects that reality.”
This is also a good reminder that the skills you feature on your resume tell a story to prospective employers. Make sure that you’re using the right keywords in your resume and cover letter to boost your chances of getting hired (and getting a competitive pay rate).
3. Don’t Be Afraid to Change Jobs … But Don’t Assume That You Have to Do So
With typical raises hovering around 3% at most companies, it’s no wonder if workers seeking higher pay set their sights on a new job.
But don’t jump to the conclusion that moving on is in your best interests. Depending on what you do for a living, staying put might be a better bet. For example, PayScale research shows that while software developers earn a 10% pay premium from switching jobs, administrative assistants earn more if they stay — 19% more than new hires.
Chris Martin, PayScale’s former director of research, explains:
The advantage of switching employers is that your wage gets reset to the market rate, but it comes at a cost: you lose the internal knowledge and relationships that make you effective at your company. For some jobs, like operations managers and administrative assistants, this internal knowledge is critical to success. However, software developers and staff accountants’ skills are transferrable, so organizational know how is less important. Wages for experienced software developers move so fast that companies struggle to keep up – seasoned developers can typically earn $9,600 more by jumping ship.
Whether you choose to stay or go, knowing how much your skills are worth on today’s job market will help you get the pay you deserve. Then you can decide whether to put that knowledge to use by negotiating higher compensation at your current job … or moving on to the next opportunity.
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