Reasons Why Wages Vary Within an Occupation



Want to be a singer, song writer or musician? Katy Perry, Beyonce Knowles, Taylor Swift, Rihanna, Adele, Nicki Minaj, Mariah Carey, and last but not least, Madonna all made over $10,000,000 last year. Singers are all rich, right? Not so much. Just a handful of the more successful singers ever make over $100,000 a year, and only a select few ever become millionaires. Truth be told, the median annual salary for musicians and singers is a mere $36,478 a year (as reported by payscale.com).

If you become a corrections officer you'll likely make between $30,000 a year, on the low end, and $70,000 on high end. Dentists make anywhere from $80,000 to $180,000 a year. But if you're an anthlete you may make $40,000 a year or $2 million a year. When evaluating potential careers, it's important to have a realistic understanding of what you could potentially earn, what you're likely to earn, and least amount you'll earn. Below we'll (1) discuss wages and why they vary and (2) identify those occupations where there's greater than $100,000 disparity between the top wage earners and the bottom-earning workers.

Top wage earners include the top 10% of all workers in a given occupation. That is, top wage earners make more than 90% of all other workers within their occupation. Bottom wage earners include the bottom 10% of all worker in a given occupation. That is, these wage earners make less than 90% of all other workers within their occupation. The disparity between these two groups of earners, also referred to as the "wage difference", is the difference between the wage points for these two groups of earners. For example, as of May 2012, the top 10% of correctional officers employed in the United States made over $69,860 a year. The bottom 10% of correction officers earned less than $27,000 a year. Hence, the wage difference for the occupation of correctional officer in the United States is $42,860 ($69,860 - $27,000).

Why Wages Vary
There are a variety of factors that influence pay for jobs within the same occupation. Frequently, the more variability there is in these factors, the greater the wage difference between top wage earners and bottom wage earners within the occupation. For example, there is very little wage difference between construction laborers in the housing industry since skill and education requirements are pretty much the same for all workers - and experience has little impact on a workers ability to perform routine tasks. However, there is larger wage differences among business professionals, where experience, education and employer vary from worker to worker within an occupation.

  • Experience and skill. At the end of the day, what a worker can actually accomplish is going to be the biggest determinant of pay. A skilled litigator with a law degree from Harvard is going to earn substantially more than an unskilled litigator with a law degree from Harvard. Typically, skill and ability are result of experience. Employers look at years of experience as a good indicator of a worker's skill level and productivity. Workers with both experience and in-demand skills usually earn more that workers in the same occupation that lack similar skills and experience.

  • Location. Wages for workers in the same occupation, and position, can vary drastically from one state to another. This is usually a function of cost of living. For example, a correctional officer employed in California, where the cost of living is relatively high, can make as much as $70,000 a year. A correctional officer employed in Kansas, where the cost of living is relatively low, typically won't make more than $55,000 a year.

  • Credentials. Professional certifications, licensing and advanced education all contribute to wage disparity within an occupation. Obviously, those with advanced education, professional licensure and industry certifications typically earn more than those without similar credentials. Industry and vendor specific creditials are also highly sought after by employers.

  • Job description and responsibilities. Even within the same occupation, workers may have varying jobs and responsibilities. Those with greater responsibility may receive greater remuneration than those with less responsibility, or whose jobs involve less complex tasks.

  • Industry or employer. Wage difference among workers within an occupation is often a function of industry and employer. Employer success, market dominance, corporate culture and clientele are all factors influencing how much an employer is willing to pay its employees. A wealth manager working for a commercial bank may make much less than a wealth manager working with a highly specialized boutique firm that only works with clientele of high net worth.

  • Success and performance. Workers in occupations where pay is based on job performance may have very high or very low wages. A successful car salesman may make over $100,000 a year. A less successful car salesman, working for the same company, may earn less than $40,000 a year.

Occupations With Traditionally High Wage Differences

The following are the occupation groups that have a wage difference greater than $100,000. (Again, wage difference is difference between the top 10% of wage earners and lowest 10% of wage earners in an occupation.)

Below we'll explore each occupation group in detail, examining wage variations, median annual wages and wage differences.

Arts, Entertainment, and Sports

To become a successful entertainer, artist or athlete requires years of practice, exceptional skill and talent. Very few of these professionals every hit it big. But those that do make it big, can look forward to a very lucrative career. The wage difference between the lowest 10% of wage earners in these occupations and the highest 10% of wage earners is roughly $170,000. Of these, actors experience the largest wage difference. Very few people every become successful actors and there are very few positions at this level. Most actors make under $60,000 a year.

Occupation Total Employment Median wage Lowest 10% wage earners Highest 10% wage earners Wage difference
Actors 59,200 $41,200 $18,700 >$187,000 >$169,000
Athletes 11,500 $43,400 $20,200 >$187,000 >$167,000
Directors / Producers 97,300 $69,000 $31,400 >$187,000 >$156,000
News Analysts 4,300 $61,500 $28,200 $182,000 $154,000
Art Directors 33,100 $85,600 $45,000 $168,000 $123,000
Film and Video Editors 24,500 $57,200 $25,500 $146,000 $120,000
Singers and Musicians 38,900 $50,300 $187,000 $138,000 $119,000
Source: U.S. Bureau of Labor Statistics (BLS) OES survey. Lowest and highest wage earner percentiles rounded to nearest hundred and thousand, respectively.W age estimates above $187,000 are not available.
Other factors that lead to large wage differences among art, entertainment and sports professionals include industry of employment, geographic location, and hours worked. Many singers and musicians only work part- time and do not work the entire year. Wage differences between the top wage earners and those at the bottom can be substantial.

Industry is also a big factor when it comes to earning potential. For example, directors and producers working in advertising and public relations industries make just over $90,000 a year, nearly twice as much as directors and producers working in theater, who make a median annual wage just over $49,000 a year.

Next to industry, location has the largest impact on earning potential and wage difference for these occupations. The median annual wage for art directors working in New york is roughly $114,000. The median annual wage for art directors working in South Carolina is $44,120. However, it's important to take into account the fact that cost of living in South Carolina is substantially lower than it is in New York.

Healthcare

There is a substantial wage differences between healthcare workers at the top of the pack versus those at the bottom of the pack. Big wage differences in healthcare occupations is due in large part to varying levels of education, credentials and experience. Before healthcare workers can becoming top wage earners they typically must complete several years of on-the-job training and/or a residency program (which can last up to 8 years). During periods of training and residency, pay for workers is typically much lower than it is for licensed, experienced healthcare workers and professionals.

Doctors for example, have to complete 6 to 10 years of eduction, a 2 to 3-year residency program and complete licensure requirements prior to earning an average industry wage. Once licensed, and as they gain experience, doctor's wages will increase. The wage difference for doctors is one of the highest among healthcare occupations.

Occupation Total Employment Median wage Lowest 10% wage earners Highest 10% wage earners Wage difference
Podiatrists 8,900 $120,700 $50,400 >$187,000 >$137,000
Optometrists 33,300 $101,400 $52,300 >$187,000 >$135,000
Internists 48,400 $>187,000 $60,900 >$187,000 $126,000
Psychiatrists 25,000 $182,000 $62,000 >$187,000 >$126,000
Dentists 98,000 $149,500 $70,000 >$187,000 >$117,000
Prosthodontists 650 $100,300 $70,000 >$187,000 >$117,000
General Practitioners 125,000 $180,200 $72,000 >$187,000 >$115,000
Chiropractors 29,800 $66,700 $31,400 $143,800 $112,000
Orthodontists 6,200 >$187,000 $79,000 >$187,000 >$108,000
Veterinarians 62,500 $87,600 $52,500 $157,000 $105,000
Source: U.S. Bureau of Labor Statistics (BLS) OES survey. Lowest and highest wage earner percentiles rounded to nearest hundred and thousand, respectively. Wage estimates above $187,000 are not available.
Location, speciality, and client base are also major factors affecting wages for healthcare workers. Doctors, chiropractors, and veterinarians are also likely to earn more money as the build their client base over time.

Like professionals working in other occupations, healthcare workers can earn more depending on which state they work in, and whether or not they work in a major metropolitan area. Veterinarians working in College Station, Texas can expect to earn a median annual wage of just over $40,000. If that same veterinarian were to move his or her practice to any of the major metro areas in California, they could expect to make over $170,000 a year, a difference of $130,000.

Employment area and specialty also influence wage, and account for wage differences within the same occupation. For instance, an psychiatrist working in psychiatric hospital or substance abuse center can make on the upwards of $171,000 a year, while a psychiatrist working for an insurance carrier is likely to make no more than $97,000 a year.

Management

There is a large wage difference among managers. However, this is somewhat to be expected as the job tasks, responsibilities and qualifications for managers vary dramatically from one industry to another, and from one employer to another.

General managers, for example, can have vastly different responsibilities, job descriptions and pay depending on the industry and employer. A general manager for a popular sports team, who is responsible for coordinating events, promotions, interviews with athletes, advertising and managing the teams financial affairs can easily make over $250,000 a year. A general manager for a local Taco Bell fast food restaurant will have a very different job description and can expect to make no more than $45,000 a year. Consequently, managers experience a very high wage difference - up to $142,000.

Occupation Total Employment Median wage Lowest 10% wage earners Highest 10% wage earners Wage difference
Advertising Managers 29,300 $96,700 $45,000 >$187,000 >$142,000
General Managers 2,050,000 $97,300 $45,100 >$187,000 >$142,000
Sales Managers 360,000 $111,000 $53,600 >$187,000 >$133,600
Public Relations Managers 57,000 $102,00 $55,400 >$187,000 >$132,000
Benefits Managers 16,400 $108,000 $58,400 >$187,000 >$129,000
Financial Managers 518,000 $115,300 $62,500 >$187,000 >$124,700
Higher Education Administrators 131,000 $88,400 $50,200 $174,000 $123,000
Human Resource Managers 116,600 $102,800 $60,400 $184,000 $123,000
Marketing Managers 184,500 $127,100 $66,000 >$187,000 >$121,000
Training Managers 29,900 $102,000 $57,900 $178,400 $120,000
Natural Sciences Managers 53,300 $120,000 $70,000 >$187,000 >$117,000
Chief Executive Officer (CEO) 246,000 $173,300 $72,800 $187,000 $114,000
CIS Managers 330,000 $127,700 $78,500 >$187,000 >$109,000
Purchasing Managers 70,900 $106,000 $60,900 $169,000 $108,000
Health Services Managers 310,300 $92,800 $55,900 $161,000 $105,000
Engineering Managers 179,300 $130,600 $83,800 >$187,000 >$103,600
Administrative Services Managers 268,800 $83,800 $45,600 $149,000 $104,000
Industrial Production Managers 167,000 $92,500 $56,300 $158,000 $102,000
Source: U.S. Bureau of Labor Statistics (BLS) OES survey. Lowest and highest wage earner percentiles rounded to nearest hundred and thousand, respectively.
The same factors affecting wages for all other occupations also affect wages for management professionals. Education level, job description and responsibilities, experience, and industry of employment all contribute to differences in pay among managers. Greater variations in these factors contribute to a relatively large wage difference among management occupations. Typically, the more technical the industry is, the more a manager can expect to make. Engineering, information technology and life science managers usually earn up to 3 times as much as managers in industries that are non-technical, such as fast food services, etc.

Many management occupations requiree graduate level degrees, such as a masters or doctoral degrees. This is especially true of management occupations in technical industries. Management occupations that require an advanced degree usually pay more than management occupations where an advanced degree is not required.

As is the case with sales and business occupations, many managers can increase their earnings through performance based bonuses and commissions.

Sales, Business and Financial

It's been said, if you want to know exactly how much you're worth, go into sales. Some of the richest and poorest people in the world are sales professionals. Sales people, many of whom work in financial service occupations, are paid a commission that's tied directly to their performance. Some sales professionals are paid a base salary plus commission, while others are paid purely commission. Sales professionals that are adept at their trade, can earn substantial commissions. Many skilled sales professionals prefer being paid on straight commission since their upward earning potential is unlimited.

Most companies have products that need to be sold to consumers or other businesses. Sales professionals work in just about every industry, at some level. A few industries, such as real estate, almost exclusively employ sales professionals. A real estate agent's wage is based almost entirely on commission, which is calculated as a percentage of the gross sales amount. Hence, real estate agents that sell more expensive properties typically earn more, on a per sales basis, than agents who sell less expensive properties. However, commissions can also be based on volume sales - the more you sell, the higher the commission percentage per sale.

The table below shows the sales, business and financial occupations where there is at least a $100,000 wage difference between workers as of May 2014.

Occupation Total Employment Median wage Lowest 10% wage earners Highest 10% wage earners Wage difference
Business Managers and Agents of Entertainers, Athletes and Artists 11,900 $64,200 $27,600 >$187,000 >$160,000
Financial Services Sales Agents (including securities and commodities sales persons) 316,400 $72,000 $32,200 >$187,000 >$155,000
Real Estate Agents and Brokers 38,700 $57,400 $23,900 $179,000 $155,000
Financial Planners and Advisors 196,500 $81,000 $35,500 >$187,000 >$152,000
First-line Supervisors 250,000 $71,600 $36,100 $148,400 $112,300
Wholesale and Technical Sales Professionals 335,600 $75,100 $37,500 $149,000 $112,000
Financial Analysts 262,600 $78,600 $48,200 $155,000 $107,000
Sales Engineers 68,200 $96,300 $55,900 $160,000 $104,000
Management Analysts 588,000 $80,900 $45,400 $148,000 $102,800
Financial Examiners 36,800 $76,300 $44,700 $146,000 $102,000
Source: U.S. Bureau of Labor Statistics (BLS) OES survey. Lowest and highest wage earner percentiles rounded to nearest hundred and thousand, respectively.
Even though a large part, if not all, of a salesman's pay is based on commission, experience, level of education, and industry of employment are all factors that determine total annual compensation, and contribute to large wage differences among sales related occupations. A sales rep with 10 years of sales experience under his belt is likely to make higher volume of sales, hence a higher wage, than a new sales rep just getting her feet wet.

Industry is also a big determinant of wage among sales occupations. Successful financial sales professionals, such as personal wealth advisors, can make over $300,000 a year in commissions, where successful sales engineers are not likely to make more than $150,000 a year. Even for sales professionals within the same occupation and position, wages can vary dramatically. Financial advisors that focus acquiring and advising wealthy clients usually make much more than financial advisors who work with small families and individuals with relatively low incomes.

Variations in pay and wage difference are also due to diverse levels of education among supervisors and managers of sales professionals. A supervisor who oversees the sales operations of technical or scientific products, and who has a graduate degree, is more likely to have a higher wage than a sales supervisor in charge of a telemarking sales team, where an advanced degree is not necessary, or required.

Science, Math and Engineering

Education is a big factor affecting wage differences among science, math, and engineering occupations. Obviously, jobs with higher education requirements typically offer greater compensation. To become an electrical engineering technician usually requires the completion of an associate's degree (sometimes a bachelor's) in electrical engineering technology. The pay for electrical engineering technicians ranges from roughly $50,000 to $75,000 a year. To become an electrical engineer you must obtain a bachelor's or master's degree in electricial engineering. Electrical engineers make anywhere from $75,000 to $95,000 a year.

Among science occupations, geoscientists have one of the largest wage differences (over $140,000). This is due in part to variations in levels of education, however, it's also due to the fact that many geoscientists recieve special pay for spending many months each year working over seas while maintaining strenous, irregular work hours.

The table belows shows science, math and engineering oppucations that have a wage difference greater than $100,000.

Occupation Total Employment Median wage Lowest 10% wage earners Highest 10% wage earners Wage difference
Geoscientists (not including geographers) 34,100 $90,000 $46,500 >$187,000 >$141,000
Physicists 16,800 $110,000 $55,000 $185,000 $130,000
Actuaries 21,500 $96,500 $58,100 $181,000 $123,000
Economists 18,700 $95,700 $50,500 $171,000 $120,000
Petroleum Engineers 33,800 $130,000 $74,000 >$187,000 >$113,000
Astronomers 1,660 $105,400 $52,200 $163,000 $110,500
Mining Engineers 8,300 $90,200 $52,800 $159,000 $106,000
Medical Scientists 100,800 $80,000 $43,200 $148,000 $105,000
Biophysicists and Biochemists 31,400 $85,000 $44,300 $149,000 $105,000
Mathematicians 3,150 $103,700 $54,800 $157,000 $102,000
Political Scientists 5,650 $105,000 $52,200 $154,000 $102,000
Source: U.S. Bureau of Labor Statistics (BLS) OES survey. Lowest and highest wage earner percentiles rounded to nearest hundred and thousand, respectively.
In addition to level of education and location of employment, experience, industry and credentials also influence earnings and wage differences among science, math and engineering occupations. For many occupations, such as actuary, licensing must be obtained and state exams must be past. Like medical professionials, many science, math and engineering professionals must first gain experience working as a trainee for lower pay until they gain experience, earn their credentials, and are able to demand higher salaries.

In many occupations, especially research positions, even the highest level of education doesn't equal a high starting salary. Biochemists, for example, who are required to earn a Ph.D. often get their career started in entry-level postdoctoral research positions that do not reflect their level of education, or future earning potential. As they gain experience, their wage level will increase.

Industry is also a big determinant of pay. Economists who pursue career opportunities in banking, with a few good years of experience under their belt, can look forward to a generous salary of over $120,000 a year. Economists, with a comparable education, working in government agencies and institutions, make about half that much.

Other Occupations

Other occupations with higher than average wage difference among workers include air transportation, teaching, and law. Among these occupations, judges and magistrates have the greatest wage difference. It's not uncommon for some judges to make $150,000 more than other judges. Pay for judges is determined mostly by level of authority (position), experience, and the complexity of legal cases they handle.

Other Occupations

Other occupations with higher than average wage difference among workers include air transportation, teaching, and law. Among these occupations, judges and magistrates have the greatest wage difference. It's not uncommon for some judges to make $150,000 more than other judges. Pay for judges is determined mostly by level of authority (position), experience, and the complexity of legal cases they handle.

Occupation Total Employment Median wage Lowest 10% wage earners Highest 10% wage earners Wage difference
Judges and Magistrates 28,100 $115,200 $31,500 $179,000 $147,000
Attorneys 604,000 $115,000 $55,000 >$187,000 >$132,000
Airline Pilots and Flight Engineers 76,000 $118,000 $65,000 >$132,000 >$122,000
Administrative Judges and Hearing Officers 14,200 $88,000 $42,000 $157,000 $115,000
Higher Education Teachers 1,522,000 $63,000 $29,000 $139,000 $110,000
Commercial Pilots 38,200 $76,000 $36,000 $141,000 $106,000
Air Traffic Controllers 22,900 $122,400 $67,000 $172,000 $105,000
Source: U.S. Bureau of Labor Statistics (BLS) OES survey. Lowest and highest wage earner percentiles rounded to nearest hundred and thousand, respectively.
As is the case with other occupations that experience high wage difference, earnings in the fields of teaching, law and air transporation are influenced by a number of factors, such as industry of employment, credentials, and location.

In education, whether a worker is employed for a state-owned or private college or university greatly impacts earning potential. As of 2014, the median annual wage for postsecondary computer science educators employed by state-government run higher education institutions was $88,000. During this same time period, teachers working for privately owned and operated business, computer and management training schools was just under $52,000 a year.

In the case of law, location makes a huge difference in wage. All other things being equal, a lawyer employed in Washington, D.C. metro area will make, on average, $154,000 a year, while a similarly qualified lawyer in Western Montana makes under $50,000 a year.

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