What Does Median Salary Mean?

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?

If you lined up the individual salaries of people working in a particular occupation in order from lowest to highest or highest to lowest, the median salary is the one that falls in the middle of that range. For example, if there are three widget makers, and they earned $20,000, $30,000 and $35,000 each, the median salary is $30,000. The Occupational Outlook Handbook, published by the U.S. Bureau of Labor Statistics, and O*NET OnLine, which the U.S. Department of Labor, Employment and Training Administration sponsors, always report the median salary when discussing earnings.

Why Do You Need to Know About Earnings?

When gathering information about a career you are considering, you will want to find out what you can expect your compensation to be. While salary isn't the most significant predictor of job satisfaction—how suitable a career is for one's personality, interests and work-related values is—you need to make enough money to pay your bills. You will also need to know what other people in your field typically earn. 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 are making when you ask for a raise. It will help you negotiate with your boss.

How Else May Salary Be Reported?

You may also come across the mean salary, instead of the median salary, for an occupation. Mean is another word for average. You can calculate it by adding up all the salaries and then dividing that total by the number of salaries.

Take the above example of the widget makers' earnings. When you add them together ($20,000+$30,000+$35,000) the total is $85,000. To get the mean, divide the total by the number of salaries you have: $85,000/3. The mean is about $28,333. As this example demonstrates, the mean and median are frequently different from one another.

The median salary rather than the mean salary more accurately represents earnings.

Why is It Better to Look at Median Salary Than Mean Salary?

In the above example, we looked at three salaries that had a difference of $15,000 between the highest and lowest ones. A wide disparity between the lowest and highest salaries in a field is typical. It takes into account how employers compensate entry-level earners and how much they pay workers with many years of experience, as well as the salaries of everyone in between. There are also outliers—workers who make very little and those with exceptionally high salaries regardless of their experience. 

Let's look at another example. There are nine earthworm farmers. Two earn $18,000 each, three of them each earn $19,000, and there are two who make $20,000 each. Another works for a stingy boss and only earns $10,000. One who is fortunate gets a very generous salary of $45,000 (he is the stingy boss). The mean salary is approximately $20,889 ($188,000/9). 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 to find the mean ($10,000, $18,000, $18,000, $19,000, $19,000, $19,000, $20,000, $20,000, $45,000), you discover that it 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.

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