When you’re thinking about earning money to donate it to charity, you need compare different jobs on how much you’ll earn over your lifetime. We have an on-going project to help you work out which career path has the highest expected earnings for you. Over the next couple of months, we’d like to show you:
- Where to get the data to make your own estimates. The best general sources we know right now are here.
- A couple of methods for making your own estimates, plus common pitfalls.
- Tables of expected earnings by profession, broken down by skill level.
- Detailed estimates for some of the most interesting and tricky cases, like jobs in finance
Currently, you can only find tables of median earnings by profession. Unfortunately, median earnings don’t translate into your expected earnings. This is partly because income distributions tend to be skewed - the top half of the population has a wider range of salaries (including some very high salaries) than the bottom half. The other reason is that you probably have some information about how good you’ll be - so ideally you want to know what the salaries are for different levels of the profession and what your chances are of getting promoted. And there are further problems with this data - this post outlines some of them. These problems become all the more pressing with jobs that have a wide spread in outcomes and high drop-out rates, like those in finance.
So can we do any better? In this post I’m going to guide you through one of the best sources of earnings information - salary.com - and show you how to use it. See this post for other websites for getting earnings and general career information.
What is salary.com?
There are lots of sites for working out salaries for different careers, but we’ve found that salary.com is the most useful because:
- It’s easy to browse through lists of job titles - you don’t have to search separately each time or enter lots of information.
- Their job categorisations are narrow enough that they reflect real jobs and wide enough that you can get a quick overview.
- Their job categorisation includes levels of seniority, so you can estimate how your salary will rise as you get promoted.
- Their methodology is good. Data is gathered from employers, not from people using the website, so it should be fairly solid. And 90% of the jobs listed have salaries calculated from more than 100 people in the job, so small sample size shouldn’t be a problem.
How to use salary.com for salary estimations
The most useful part of their website is the salary wizard where you can search or browse jobs.
Search for jobs that you’re interested in, and try to find job descriptions that have levels of seniority (which are the ones with roman numerals after the name e.g. Software Engineer III). Then for each job you can view:
- The proportions of the people in that job who have a certain level of experience and education.
- Data on salary + bonus for different levels of earnings within a job.
One way to go from here is to:
- Find a job which has several levels of seniority listed on salary.com
- Make a graph for each level of seniority that shows the different levels of pay for that seniority.
- Look at how much experience is normally required to get promoted to each level.
- You could either just get an overview from looking at these graphs or you could do a quick back-of-the-envelope calculation what you think you’ll earn. You can do this by making assumptions about how fast you’ll get promoted and how good you’ll be within each level of seniority.
- You can then do this for other jobs and compare.
In a future post, we’ll take this further and show how to do calculations based on salary.com data to estimate your lifetime earnings.
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Comments
My favorite is GlassDoor.com, although I haven’t used Salary.com much since ~2008. Do you not like GlassDoor.com as much because it’s individuals who enter the data? I myself have found that GlassDoor.com matches very well with what I earn and what friends earn.
From a brief glance, it looks like Salary.com only shows averages for the job, while GlassDoor.com shows them for individual companies. The latter could be more useful because your specific skill level can be better expressed by a company you could work for than by the general pool for your industry. It’s also obviously useful when picking specific companies once you’ve chosen a field.
This post is more meant for the stage when you’re choosing between major career options e.g. accountant vs software developer. That’s when you’ll want to do expected earnings estimations for different broad options to compare them. I thought that GlassDoor was less useful for this because it doesn’t have data for broad career options.
Good point about matching skill-sets to salaries by looking at representative companies. Salary.com shows data for different salary percentiles, but it’s tricky to know where in that distribution you’ll lie. I’ll think about how we could incorporate glassdoor data into expected earnings estimations. Perhaps it is more accurate to simply look at a few companies whose requirements match your skills, rather than trying to make estimations from salary.com data.
A thing to keep in mind, is that salary.com shows american salaries which sometimes does not match that of other countries. For example doctors in Canada/UK do not make as much as doctors in the US. http://economix.blogs.nytimes.com/2009/07/15/how-much-do-doctors-in-other-countries-make/
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