How to tell if you are underpaid, and what to do about it

Almost everyone suspects they are underpaid at some point. Some are. Many are not as underpaid as they think, and others are far more underpaid than they realize. The only way to know is to replace the feeling with a defensible estimate.

Why people stay underpaid

Internal raises are usually capped by bands and cycles. External offers are priced by what the market believes you can do. The two diverge over time, and the longer you stay, the wider the gap tends to get. Loyalty is rarely priced in.

Build a market value estimate

1. Define the role you would be hired as, not the one you hold. Titles vary wildly between companies.
2. Collect ranges from several independent sources for that role, level, location and company size.
3. Adjust for the evidence you can show: scope, outcomes and scarcity of your skills.
4. Compare total compensation, not only base: bonus, equity and benefits.

Three ways to close a gap

• Renegotiate internally, with a written case built on outcomes and market ranges.
• Change levels, by building the evidence a promotion committee needs.
• Change companies, once you know how the market reads your profile.

Each route has a different timeline and risk. Choosing the right one depends on your leverage, which is the combination of what you can prove and how much the market wants it.

Signs that you may be underpaid

• New hires at your level are offered more than you earn.
• Published salary ranges for your role start near or above your current pay.
• Recruiters quote ranges for similar roles that sit well above yours.
• Your scope has grown, with more people, budget or systems, and your level has not.
• Your last few raises were small while your responsibilities kept expanding.
• You have been in the same company for years and have never tested your value outside.

One sign alone proves little. Several together are worth an estimate.

Where to find reliable numbers

No single source is accurate, so combine them and look for the range where they overlap.

1. Job ads with published ranges. In places with pay transparency rules, many ads state a range. Collect ten for your role, level and type of company.
2. Recruiter conversations. Ask early what the range is. Recruiters answer this every day.
3. Peers. People who do comparable work at comparable companies, asked directly and privately.
4. Salary sites. Useful for a rough range, weak for precision, because titles and levels differ between companies.

Compare the right things

Most wrong conclusions come from comparing unlike things. Match on level and scope, not on title: a senior title at a small company can be a mid-level job at a large one. Match on location or on the pay policy for remote roles. Compare total compensation, which includes bonus, equity and benefits, and treat equity in a private company with caution. Last, compare with what the market pays for the job you do today, not for the job you hope to grow into.

Is it your pay or your level?

There are two different problems that both feel like being underpaid. In the first, you are paid below the range for your level. A raise fixes that. In the second, you are paid fairly for your level but you work at the next one. No raise inside the band will fix that. The fix is a promotion, or a move to a company that hires you at the level you already operate at.

If the gap is about level, read what promotion committees look for

How to raise it with your manager

1. Bring a range and its sources, not a feeling. Say where the number comes from.
2. Bring your evidence of scope and results for the last twelve months.
3. Ask a direct question: what would it take to bring my pay to this range, and by when?
4. Ask for the answer in terms of criteria and a date, and write it down afterwards.
5. Avoid ultimatums you are not ready to act on. An alternative you would really take is leverage. A bluff is a risk.

When the answer is no

A no with criteria and a date is workable. A no with neither is information: the gap will not close where you are. At that point the question is no longer about pay. It is the stay or quit decision, and it deserves the same evidence.

Work through it with the five test stay or quit framework