Say that acquaintance bragged the other day that she worked for a company where employees maintained a healthy salary range of $85,000 per year. After she left the room, another woman raised her eyebrow. She laughed as she explained that the woman who went on about her salary was a sales representative who earned about $30,000 per year. The sales rep had figured out a way to make her salary sound great without telling a lie. How? She used a formula to figure the R or range of salaries in her company. Here's how her company's salaries unfolded:

 

Staff	Salary
Owner	$100,000
Manager	40,000
Sales Representative	30,000
Workers	25,000
	18,000
	15,000

To figure the salary range above, just take the owner's salary and subtract the lowest worker's salary. $100,000 - $15,000 = $85,000. There you have it. If the owner's salary was eliminated from the equation, then the salary range would equal $25,000, or $40,000 - $15,000. The $25,000 range would be more realistic.

As college students (and even high school students) enter a long summer filled with job hunting, they learn that intimidation is part of the job-hunting package. If someone tells you that he landed a job that earns a seemingly ridiculous sum (like $75 per hour as a janitor at a theme park), ask him how he estimated that sum. If he shows you a pay stub, you might want to back down (or try to land his job next summer). Otherwise, you might learn a few ways to average a sum so that you can turn the tables on him.

You already know how to determine the range; three other ways to determine averages include finding the mean, the median, or the mode. Given the salaries above in a six-person company, we can determine the following three different averages.

A mean is computed by dividing the sum of all values by the total number of values. In this case, the mean equals the total of the salaries by the number of salaries. $100,000 + 40,000 + 30,000 + 25,000 = 18,000 + 15,000 = $228,000. Divide $228,000 by 6, and the mean would equal $38,000.

The median or middle value, the data values are arranged in ascending (or descending order as they are in the table above). If the number of employees equaled five or seven, we would pick the one that was located exactly in the middle. Since there is an even number of employees (six), the median becomes the number that lies halfway between the third and fourth number. In this case, the number that would lie between $25,000 and $30,000 would be $27,500 (30,000 - 25,000 = 5,000; 5,000 / 2 = 2,500; 25,000 + 2,500 = 27,500).

The mode is the most common value (or group of values) in a data set. Since none of the salaries are repeated, the mode might equal the closest spaced values rather than a single value. Since there's such a disparity between the owner's salary and the manager's salary, the mode would occur somewhere in the $40,000 or less range. If the company hired another worker at $15,000, the mode would be $15,000.

So we now have three average salaries for this company and one salary range:

Range = $85,000
Mean = $38,000
Median = $27,500
Mode = Somewhere under $40,000.

However, if we negated the owner's salary and used the same methods to figure the range, mean, median, and mode, we would end up with the following:

Range = $25,000
Mean = $25,600 ($40,000 + 30,000 + 25,000 + 18,000 +15,000 divided by five)
Median = $25,000 (the middle value of five salaries minus the owner's salary)
Mode = Somewhere under $40,000

The addition of the owner's salary sure makes a difference, doesn't it? So, the next time someone tries to intimidate you with his salary, ask him if he added his boss's annual wages into the equation. If he looks at you with a puzzled expression, let it go. If, however, he grins sheepishly or acts a little too defensive, then you know that he just tried to pull the wool over your eyes.

Or, to save feelings, you might discover how much folks make in your career field at the College Journal online, offered by the Wall St. Journal. Notice here that many of the salaries are quoted as being "averages." While it is doubted that owner's salaries were added into these equations, you might take into account that an "average starting salary of $27,646" for a journalist might ring true in Chicago or New York, but not in Podunk or Pulaski. But, you might be the only journalist in the latter two towns, which might make you all that more valuable!

Until Next Week,
Linda Goin