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December 23, 2002
Salaries Continue to Differ Dramatically
December 23, 2002
At a base salary of $29,200, an executive secretary would be competitively paid in Memphis, Tenn., yet considerably underpaid in San Jose, Calif., where the average base salary for the same position is $53,600 annually - or 84 percent more.
These findings, conducted by Mercer Human Resource Consulting, highlight the challenge employers face when their employees are dispersed across the country.
The 2002 edition of the survey includes detailed compensation data on 260 nonexempt jobs (eligible for overtime pay) and lower-level exempt jobs (not eligible for overtime pay). Some jobs are common to organizations in all industries, such as administrative, clerical, accounting, financial, human resources, communications, information technology, customer service, legal, and maintenance jobs. Others jobs are specific to the health care, banking, insurance, manufacturing, and engineering industries.
Nearly 1,300 mid-sized and large organizations, representing more than 25,500 locations and more than 722,000 employees, participated in this year's survey. The survey data are compiled for nearly 150 different metropolitan areas nationwide.
In general, the highest salaries for the jobs in Mercer's survey are found in large cities in the northeast (including New York City and Boston) and in California (including San Francisco and Los Angeles). The lowest salaries tend to be found in cities across the southern US in states such as Alabama, Florida, and Texas.
"You need to be careful about generalizing with jobs at this level," says Darrell Cira, a senior compensation consultant in Mercer's Philadelphia office. "Specifically, employers with employees in multiple locations need to make sure that pay analysis is determined at the job level using local data and not broad trend data."
To assess a position's pay across geographies, organizations often adjust a national market value using broad-based salary differentials for a specific city. According to Cira, this approach is appropriate for adjusting pay structures and for broadly understanding how pay differs by location to help formulate pay policy. However, it can result in significantly overestimating or underestimating specific jobs' local market value, he says.
Factors such as the local labor market, demand for job skill, and composition of the talent pool play a role in determining how much a job is paid, as well as which jobs are paid more within metropolitan areas. An intermediate accountant (which typically requires a bachelor's degree in accounting and two to four years of experience) is a case in point. At $42,400 nationally, average base pay for this job is comparable to that for the executive secretary ($41,800). However, in Chicago, an executive secretary is paid 2.2 percent more than an intermediate accountant ($45,700 vs. $44,700, respectively), while in Tampa, Fla., an executive secretary is paid 10.9 percent less than an intermediate accountant ($39,500 vs. $43,800, respectively).
"Too many employers fail to take these differences into account - and that can be dangerous," says Cira. "As companies continue to watch the bottom line in tough economic times, they don't want to underpay for talent, possibly losing good employees, or overpay for talent, unnecessarily driving up their compensation costs."