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Why You Make Your Salary

August 4, 2015

Everyone in the working world knows that salaries are important—money makes the world go around whether we like that fact or not. What you may not know, however, is why exactly you make the salary that you make. Different positions have different salary rates, but why is that?

One main component is who you are personally. “A lot of factors come into play including geographic location, skills required for the position, education level, experience required, type of work, etc,” says Ashley from Cardinal Health. If you have more years of experience or a higher-level degree, you may be offered a higher salary. 

Another component is supply and demand when it comes to specific skills or traits needed for certain positions. “If you have a skill that not many people have and there is a demand for a role that requires that skill, you will most likely receive a higher salary to attract and then retain your services at a company,” Lori from Cigna says.


Another main component is the position itself. It’s an understood fact that entry-level positions make less than management positions which make less than executive level positions. “Do some research on what the going rate is for the type of job you are seeking in your location and industry,” Sara from American Express says. “You can sometimes find this information out through websites like, but there are plenty of options on the internet and public records to find out.”


The job market in general is another major factor when it comes to determining salary.  Lori from Cigna shares: “Often, companies will use external vendors to determine what the market rate is for specific roles.” Typically, companies want to stay relatively consistent across the board with other similar companies while also staying competitive and attractive to prospective employees.


Location is also a crucial component to setting salaries. Cost of living plays a large role—the same job will pay more in NYC or LA than it would in Oklahoma City or Austin, TX. Do research to find out what is common across the board for your field, as well as more specifically what is common in your area, because both pieces of information will help you in your negotiating.


Companies sometimes leave room for you (and your salary) to grow over time. Most positions tend to have a salary range, and you may be discouraged or disappointed to find that the offered salary is at the lower end. Don’t let this be an instant disqualifier though. Cassie from The Hershey Company says, “They typically also give room for merit increases each year so there is room to grow within the pay range based on performance.”


Know that typically, companies bring their best offer to the table when it comes to salaries, but there may be room for potential negotiation. Research thoroughly so you can understand your field, the job market, what your skills and experience are worth, and what the company is working with as well. There might not be much wiggle room at first, but working hard and proving yourself over time always has the potential to bring bonuses and raises to boost that salary even more.


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