How to Calculate If You're Being Paid Fairly

Wondering if you're underpaid? You're not alone. Studies show that 60% of workers believe they're underpaid, but only half actually are. Here's how to find out where you stand.

Step 1: Research Your Market Value

Use Salary Data Websites

• Glassdoor: Company-specific salaries with employee reviews
• Payscale: Detailed compensation reports based on experience, location, and skills
• Salary.com: Comprehensive salary data with cost-of-living adjustments
• LinkedIn Salary: Insights based on your network and industry
• Levels.fyi: Excellent for tech industry compensation data

Consider These Factors

Your fair market value depends on:

• Experience level: Entry-level, mid-level, senior, or executive
• Location: Cost of living and local market conditions
• Industry: Tech typically pays more than non-profit
• Company size: Large corporations vs. startups
• Skills: Specialized skills command premium pay
• Education: Advanced degrees often increase earning potential

Step 2: Calculate Your Total Compensation

Don't just look at base salary. Your total compensation package includes:

Direct Compensation

• Base Salary: Your annual or hourly pay
• Bonuses: Performance, signing, or annual bonuses
• Commission: Sales incentives and commissions
• Stock Options/RSUs: Equity compensation value

Benefits (Add 20-30% to Salary Value)

• Health Insurance: Employer contribution (~$7,000-$20,000/year)
• 401(k) Match: Typically 3-6% of salary
• Paid Time Off: Calculate value of vacation days
• Professional Development: Training budget and tuition reimbursement

Step 3: Compare to Market Rates

Now compare your total compensation to market data:

• Below 10% of market rate: Significantly underpaid
• Within 10% of market rate: Fairly compensated
• Above 10% of market rate: Well compensated

Signs You're Underpaid

1. New hires are making more than you
2. You haven't received a raise in 2+ years
3. Your raise didn't match inflation (3-4% minimum)
4. Competitors offer significantly more for similar roles
5. You have more responsibilities but same pay
6. Your salary is below the 50th percentile for your role

How to Calculate Your Hourly Worth

Understanding your hourly rate helps evaluate your true earnings:

Use our Salary to Hourly Calculator to convert your annual salary. For a standard 40-hour week:

• $50,000/year = $24.04/hour
• $75,000/year = $36.06/hour
• $100,000/year = $48.08/hour

Negotiation Strategy When Underpaid

Gather Evidence

• Document your accomplishments and value
• Collect salary data from multiple sources
• List increased responsibilities
• Note any special skills or certifications

Schedule the Conversation

Request a meeting with your manager:

• Choose a good time (after successful project, annual review)
• Come prepared with data and specific numbers
• Practice your pitch beforehand
• Stay professional and focus on value, not personal needs

Present Your Case

Be Prepared to Negotiate

• Know your target number and minimum acceptable
• If immediate raise isn't possible, negotiate performance review timeline
• Consider non-salary benefits (extra PTO, remote work, title change)
• Get any agreement in writing

When to Consider Leaving

Sometimes the best raise is a new job. Consider moving on if:

• Your employer refuses to negotiate after you've proven your value
• You're 15%+ below market rate with no path forward
• There's no room for advancement
• The company consistently undervalues employees
• You can get 20%+ increase elsewhere (typical for job changes)

Key Takeaways