Median Salary

What You Need to Know About Earnings

Woman's hand giving stack of US $20 bills to man's hand
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What is Median Salary?

To find out what the median salary is for a particular occupation, one arranges the salaries of all individuals working in it in numerical order. The middle amount on the list is the median when there is an odd number of data. When there is an even number, the median is calculated by averaging the middle two salaries. 

For example, let's say there are three widget makers employed in the United States.

Their salaries, from lowest to highest, are $20,000, $30,000 and $35,000. The median salary is $30,000. If there is a fourth widget maker who earns $33,000, the median is $31,500 [($30,000+$33,000)÷2].

Why Do You Need to Know About Earnings?

When you are researching a career, one of your pressing questions will be "How much will I earn?" Although salary isn't the most significant predictor of job satisfaction—whether it is a good fit for you is—you will need to make enough money to pay your bills. 

It is essential to know what other people in your field typically earn when you are negotiating your salary with a current or prospective employer. With this information, you will be able to determine whether a job offer you received is fair. You will also want to know how much other people in your field make when you ask for a raise.

Many career information resources use the median salary when reporting earnings.

Examples are the Occupational Outlook Handbook and O*NET OnLine, two frequently cited government publications. 

How Else Is Salary Reported?

You may also come across the mean salary, instead of the median salary, for an occupation. Mean is another word for average. It is calculated by adding together the salaries of everyone working in an occupation and then dividing the total by the number of salaries.

Take the earlier example of the widget makers' earnings. Remember our three widget makers (the only ones working in the U.S.) earned $20,000, $30,000, and $35,000, respectively. When added together ($20,000+$30,000+$35,000) the total is $85,000. To get the mean, divide the total by the number of widget makers: $85,000÷3. The mean is  $28,333.33. As this example demonstrates, the mean and the median, $30,000 in this instance, are frequently different from one another. The median salary, rather than the mean salary, more accurately represents actual earnings in an occupation.

Why You Should Look at Median Salary Instead of Mean Salary

In the above example, we looked at three salaries that had a difference of $15,000 between the highest and lowest ones ($35,000-$20,000). It is not unusual for there to be a disparity between the lowest and highest salaries in a field. It takes into account how employers compensate entry-level earners versus how much they pay workers with many years of experience, as well as the salaries of the employees in between. There are also outliers—workers who make very little and those with exceptionally high salaries.

Let's look at another example. There are nine earthworm farmers.

Two earn $18,000 each, three of them each is paid $19,000, and two make $20,000 apiece. Another works for a stingy boss and only earns $10,000. One gets a very generous salary of $45,000 (he is the stingy boss). These are the outliers, as discussed above.

To get the mean salary, we total those amounts, as follows:

      $18,000
    +$18,000
    +$19,000
    +$19,000
    +$19,000
    +$20,000
    +$20,000
    +$10,000
    +$45,000
Total: $188,000

Then we divide the result, $188,000, by the number of workers (9) and get a mean salary of approximately $20,889. That is higher than what most people working in this field earn, particularly the one with the lowest compensation, but significantly less than the highest earner's salary. The median salary is not as likely as the mean salary to be skewed by outliers, for example, an extremely high salary or an extremely low salary that only a few people may earn.

When you put the earthworm farmers' salaries in numerical order ($10,000, $18,000, $18,000, $19,000, $19,000, $19,000, $20,000, $20,000, $45,000), you discover that the median salary is $19,000. That is more in line with what the majority of earthworm farmers in our example earn than the average or mean of $20,889.