Facts about Salary

FACT: “When negotiating for a salary, most of us reach for a nice, round number like $65,000. Or $90,000. Or $120,000. But, by favoring all those zeros, we may be missing an opportunity to score a better deal, according to a new paper from researchers at Columbia Business School. They found that using more precise numbers in an initial request—or anchor, as it is known in negotiating parlance—generally results in a higher final settlement. Precision conveys the impression that the job candidate has done extensive research and deeply understands the market for his services, said Malia Mason, the lead author of the paper and a professor at Columbia who teaches a course on managerial negotiations. Ms. Mason's research indicates that a job candidate asking for $63,500 might receive a counteroffer of $62,000, while the request for $65,000 is more likely to yield a counteroffer of, say, $60,000, as the hiring manager assumes the candidate has thrown out a broad ballpark estimate” (Wall St. Journal, 5/28/13).

FACT: “For MBA graduates with minimal experience – three years or less – median pay was $53,900 in 2012, down 4.6% from 2007-08” (an analysis conducted for The Wall Street Journal by PayScale.com; WSJ, 1/6/13).

FACT: Just under 1% of global households control nearly 40% of the world's private financial wealth, according to the Boston Consulting Group. In China, where nearly half the population is still rural, just under 1% of households control more than 70% of the nation's private financial wealth, BCG estimated in 2008. Surveys of public opinion regularly place corruption and income inequality at the top of Chinese concerns (Wall St. Journal, 8/16/12).

FACT: Entry-level, college-educated men earned an average of $21.68/hour in 2011 (a 7.6% decline from 2000); women earned $18.80/hour (a 6% drop from 2000). Economic Policy Institute survey; Wall St. Journal, 5/7/12.

FACT: Annual wages by profession (Seattle Times, 4/15/12):

  • Retail: $31,195
  • Construction: $52,531
  • Professional and technical: $80,077
  • Management: $96,586

FACT: According to a study by the Congressional Budget Office, people who hold a master’s degree or something less, earn more working for the federal government (when benefits are included). But for those with more advanced degrees, a private-sector job will pay about 23% more than a federal job. More details from the study (as reported in CNN Money, 1/31/12):

  • Workers with bachelor degrees earn about the same hourly rate in federal and private-sector jobs. However, the federal employee earns benefits worth 46% more.
  • Federal workers with no more than a high-school degree are paid 21% more on average than their private-sector peers, and have average benefits worth 72% more.
  • Workers with Ph.D.s, law degrees and other advanced degrees make about 23% more than their peers in the federal workforce.

FACT: Employees who are “too likeable and too trusting” receive lower salaries and fewer promotions (20-year study of more than 1,500 peoples’ careers by Christine Riordan, dean of the University of Denver Daniels College of Business; Wall St. Journal, 7/15/11).

FACT: It’s well known that the middle class has been shrinking since the 1970s, with the rich getting richer and the poor growing poorer. For example, in 2008 (the last year for which data are available), the group at the very top of the pay scale — the top 0.1 percent of earners — took in more than 10 percent of all the personal income earned in the U.S. However, who those top earners are has always been a bit of a mystery. Now, thanks to a new, landmark analysis of tax returns by economists Jon Bakija, Adam Cole and Bradley Heim, we know the following about the top 0.1 percent of earners (Washington Post, 6/18/11):

  • On average, they earn $1.7 million per year, including capital gains.
  • 41% are executives, managers and supervisors at non-financial companies (of whom almost half are owners).
  • 18% are financial professionals, or managers at financial firms.
  • 6.2% are lawyers.
  • 4.7% are real estate professionals.
  • 3% are media and sports figures.

FACT: The median weekly earnings for full-time wage and salary workers 25 years or older (U.S. Bureau of Labor Statistics; Workforce Talent ezine, 6/23/11):

  • Less than a high-school diploma = $487 men / $388 women
  • High-school graduate, no college = $714 men / $555 women
  • Some college or an associate degree = $825 men / $650 women
  • College graduate = $1,225 men / $934 women
  • Advanced degree = $1,550 men / $1,162 women

FACT: “The average person's pay plateaus in his 40s, according to the latest data from the U.S. Census Bureau. Data from 2009, the most recent available from the Current Population Survey, a joint effort between the Bureau of Labor Statistics and the Census Bureau, show that income grows at a steady rate for people in their 20s and 30s. No surprise there. But once people hit midlife, the good times are over. The 40s are the peak earning years for most, when the median income for men working full-time hovers between $52,000 in their early 40s and about $54,000 in their late 40s. After that, median income barely budges — it's still $54,000 for men aged 50 to 54” (Wall St. Journal, 6/18/11).

FACT: “Over a lifetime, the earnings of workers who have majored in engineering, computer science or business are as much as 50% higher than the earnings of those who major in the humanities, the arts, education and psychology” (research analysis by Georgetown University's Center on Education and the Workforce; Washington Post, 5/24/11). “The report is based on previously unreported census data that definitively links college majors to career earnings. Earlier studies have looked at salaries after graduation, but the new report covers earnings across a person's working life and is based on a much larger survey.”

FACT: “A worker with a bachelor's degree can expect to make 84 percent more in a lifetime than a colleague who has only a high-school diploma” (research analysis by Georgetown University's Center on Education and the Workforce; Washington Post, 5/24/11). “The report is based on previously unreported census data that definitively links college majors to career earnings. Earlier studies have looked at salaries after graduation, but the new report covers earnings across a person's working life and is based on a much larger survey.”

FACT: People who work in big-city metropolitan areas earn 30% more than those who work in suburbs or rural areas (U.S. Department of Commerce figures, as quoted in the book “Triumph of the City” by Phillip Langdon; CBS Sunday News, 5/22/11).

FACT: “Labor Department figures show that from 2007 to 2009 [the period of the Great Recession], more than half the full-time workers who lost jobs and then found new work took pay cuts. A depressing 36% had to take positions paying 20% less than the ones they lost” (Time magazine, 3/1/11).

FACT: Workers laid off during the 1981 – 1982 recession took a 30% pay cut when they found work again. Even after 15 or 20 years, those workers lagged behind: Their wages were still 20% lower than their counterparts who didn’t lose their jobs in the original layoffs (a study of three decades of Social Security data by Columbia economist Von Wachter; Wall St. Journal, 1/11/11).

FACT: “Research shows that children of workers who lose jobs and go back to work at lower wages appear to suffer from lower wages, too. In a 2008 study, a group of economists tracked the wages of 60,000 father-child pairs from 1978 to 1999. Children whose fathers went through mass layoffs in the 1982 recession ended up with 9% lower earnings than similar children whose fathers didn’t experience the job cuts” (Wall St. Journal, 1/11/11).

FACT: The median starting salary for 2010 college graduates who completed an internship: $41,580. Those without internships were offered a median starting salary of $34,601 (National Association of Colleges and Employers; Seattle Times, 10/31/10).

FACT: “Most people know that the family income of those who drop out of school falls far below the family income of those who complete college. Less well known is the fact that the income of those with less than a college degree has not increased for three decades or more” (Brookings Institute report, 3/29/10).

FACT: “Kids from families in the bottom 20 percent of the income distribution are nearly five times as likely to wind up in the bottom 20 percent as kids from families in the top 20 percent. Yet, our research shows that children whose parents were in the bottom 20 percent of earners tripled their odds of earning $85,000 or more per year by obtaining a four-year college degree” (Brookings Institute report, 3/29/10).

FACT: In 2009, the national average annual wage fell by $384 to $39,269, and the median wage fell by $253 to $26,261 during the worst economic slump since the Great Depression, according to Social Security Administration statistics released last week (Bloomberg Business Week, 10/25/10).

FACT: The top 40% of Americans earn 75% of the money (American Community survey data from the 2009 U.S. Census; Advertising Age, 10/21/10).

FACT: "More than half of Americans say they think federal workers are overpaid for the work they do" (Washington Post poll; Seattle Times, 10/18/10).

FACT: "The share of total income going to the top 1% of earners, which stood at 8.9% in 1976, rose to 23.5% by 2007, but during the same period, the average inflation-adjusted hourly wage declined by more than 7%" (Robert H. Frank, economics professor at the Johnson Graduate School of Management at Cornell University; New York Times, 10/17/10).

FACT: Average salary increases — and expected future increases (Tower Watson survey of 1,046 U.S. employers; Workforce Management magazine ezine, 10/14/10):

  • 2009 = 1.6%
  • 2010 = 2.3%
  • 2011 expected = 2.7%

FACT: Nationwide, one in seven men earn annual salaries of $100,000 or more; About one in 18 women earn the same (a study of new U.S. census figures; The Washington Post, 10/7/10).

FACT: In 2007, right before the 2008 – 2010 recession, the richest 1% took home 23.5% of all U.S. income (American Economic Institute; CBS Morning News, 9/19/10).

FACT: The typical CEO salary is 350 times more than that of the typical worker (former Labor Secretary Robert Reich; CBS Morning News, 9/19/10).

FACT: The salaries for 90% of the most plentiful jobs (such as child care and retail positions) are so low that the people holding these positions — if they have a family of four — are living below the federal poverty level (Associated Press evaluation of data from the Bureau of Labor Statistics; Seattle Times, 8/22/10).

FACT: According to the federal Labor Department, it costs about $12 more per hour to employ a state or local government worker than a private-sector employee. A big part of this difference is employee benefits. For example, it costs state and local governments $3.16 per hour to pay for employees' retirement and savings plans (versus 96 cents per hour for private workers) and $4.25 per hour for health insurance (versus $2.08 per hour for private workers). Labor Department Report, 6/9/10.

FACT: The average salary offered to graduates with a bachelor's degree in 2010 was $47,673 — slightly less than the $48,515 offered in 2009 (survey by the National Association of Colleges and Employers, Seattle Times, 6/6/10).

FACT: In 2008, 41% of American workers said they were satisfied with the wage they made. In 2009 (during the recession), that figure dropped to 34.6% (2009 Conference Board survey, Wall St. Journal, 5/25/10).

FACT: What 5,400 members of the upper-management job-search site TheLadders.com said when asked, "how much more money would it take to convince you to stay in your job if you really wanted to leave?" (Wall St. Journal, 5/25/10):

  • A raise of more than $25,000 (20% of respondents)
  • A raise of more than $15,000 (50% of respondents)

FACT: During one of the strongest economic upswings in decades (2002 to 2007), the average hourly compensation for high-school and college graduates didn't increase even one percent (Lawrence Mishel, President of the Washington based think tank, the Economic Policy Institute; CBS Sunday Morning, 2/28/10).

FACT: From 1979 to 2007, worker productivity skyrocketed 70%, yet employee wages barely budged 4% (Lawrence Mishel, President of the Washington based think tank, the Economic Policy Institute; CBS Sunday Morning, 2/28/10).

FACT: Of all the income growth created during the boom years of 1989 to 2007, the bottom 90% of the population earned just 15% of it, while the upper 1% earned 55% of it and the upper 10th of that 1% earned 33% of it (Lawrence Mishel, President of the Washington based think tank, the Economic Policy Institute; CBS Sunday Morning, 2/28/10).

FACT: Today, the salary of the typical CEO of a large company is 270 times what the typical worker earns. But in the 1960s and '70s, that same CEO's salary — adjusted for inflation — was just 20 or 30 times more than what the typical worker earned (Lawrence Mishel, President of the Washington based think tank, the Economic Policy Institute; CBS Sunday Morning, 2/28/10).

FACT: From 1970 to 2008, the median family income has risen 26% — rising from $48,825 to $61,521 (Bureau of Labor statistics; CBS Sunday Morning, 2/28/10).

FACT: In general, skilled women who drop out of the workfoce for three or more yars earn an average 37% less after returning, compared with those who didn't take career breaks (2004 study of 3,096 college-educated people by the Center for Work-Life Policy, New York; Wall St. Journal, 2/17/10).

FACT: "Men are still the major contributors to household income, with 78% making at least as much or more than their wives. But the percentage of women whose income has outpaced their husband's has more than quadrupled, jumping from just 4% in 1970 to 22% now" (Pew Research Center study of U.S.-born spouses, ages 30 to 44; The Washington Post, 1/19/10).

FACT: In 2007, full-time, year-round women workers earned an average of $33,000 a year; men earned an average of $46,000 (The Washington Post, 1/19/10).

FACT: "The wages that laid-off workers can expect when they do find a new job tend to be lower the longer they are without work. Long-unemployed people who do find jobs often spend years working to get back to their old wages" (according to studies in the 1980s by economists Lawrence Katz of Harvard University and Bruce Meyer of the University of Chicago; Wall St. Journal, 9/25/09).

FACT: 61% of hiring managers are willing to negotiate higher compensation for qualified candidates (CareerBuilder.com and Robert Half International Inc. survey of 500 hiring managers, 8/25/09).

FACT: "Females in dual-earner couples now provide an average 44% of household income, up from 39% in 1997" (study of about 3,500 wage, salaried and self-employed workers and small-business owners by the nonprofit Families and Work Institute; Wall St. Journal, 3/26/09).

FACT: "Census figures show that college grads earn an average of $57,500 a year, which is 82% more than the $31,600 high-school alumni make. Multiply the $25,900 difference by the 40 years the average person works and, sure enough, it comes out to tad over $1 million. Community college graduates out-earn high-school graduates by only $8,400 a year" (Forbes magazine, 2/2/09).

FACT: Full tuition costs for 32% of executive M.B.A students is funded by their companies, while 36% of executive M.B.A students receive just partial funding (EMBA Council; Wall St. Journal, 1/21/09).

FACT: In the year ended June 30, 2008, stock awards accounted for an average of 60% of total pay among Fortune 1000 CEOs who got such awards (Equilar 2009 Executive Compensation Outlook Report; Wall St. Journal, 1/20/09).

FACT: About half of the nearly 200 companies surveyed by consulting firm Mercer have changed or are considering changes in the way they grant stock or stock options (Wall St. Journal, 1/20/09).

FACT: Low-wage workers are almost 2 ½ times as likely to be out of work as higher-wage workers (2007 U.S. Government Accountability Office report; Philadelphia Inquirer, 1/19/09).

FACT: "When workers graduate from high school, their average wage jumps about 32%, from $11.38 to $15.01 an hour. If they attend college but don't get a degree, their wages rise about 13%. But if they graduate, their average hourly wage leaps 77% to $26.51 an hour. Getting an advanced degree boosts earnings 27%, to $33.57" (2008 Economic Policy Institute study; Associated Press, 1/18/09).

FACT: An 8% to 15% salary increase is normal when changing jobs (Laurie Mitchell, owner of Laurie Mitchell & Company; Newhouse News Service, Seattle Times, 12/28/08).

FACT: For most American workers, pay raises averaged about 3.8% in 2008. This is virtually unchanged from the 3.7% salary increase averaged in 2007. These marginal increases do little to combat inflation. (Mercer LLC survey, 10/08).

FACT: "Some 63% of U.S. workers (63%) say they are well-paid. Just 52% of British workers, 51% of German workers and 50% of Spanish employees say they are well-paid. Meanwhile, 54% of workers in France and 50% of Italian workers say they are badly paid. In fact, 20% of Italian workers believe they are very badly paid" (International Herald Tribune/France 24/Harris Interactive survey; Business Wire, 10/9/07).

FACT: "In their current jobs, the top two most important aspects are the interesting nature and the salary. In Great Britain, France, Italy and Germany, the interesting nature of the job comes ahead of salary for importance. For Spanish and American workers, however, salary is more important than the interesting nature of their jobs. The working hours are third for each of the countries in importance" (International Herald Tribune/France 24/Harris Interactive survey; Business Wire, 10/9/07).

FACT: The typical raise for someone moving into a management position within the same company is 10% to 15%. For a bump in pay of 25% or more, a worker typically needs to change employers (Wall St. Journal, 7/24/2007).

 

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