According to the Bureau of Labor Statistics, the national average income in the U.S. was $56,310. However, this may or may not be a good salary depending on things such as your age, your location, your education, your experience level, and the industry you work in.
A “good salary” to you might be a fortune to one person in the country, and might not be livable wages to another. A “good salary” is subjective, and there is no easy number that can tell you if your salary is good enough.
Throughout the country, the average salary is different across age groups, cities, and other factors. For example, you could live in one city and have the same job as someone in another city, but you could have different salaries. Because of this, it is almost impossible to know for certain whether your salary is a good salary or not.
The definition of a “good” salary may be completely different from person to person as well. For example, a good salary for you could be that it allows you to pay your expenses and loan and credit card payments and have some cash left over in the end.
For someone else, this salary may not be good and instead their definition of a “good salary” is a salary that gives them more than the basic necessities, focusing on their “wants”, such as travel, entertainment, and other necessary expenses.
Having a good salary is important for making sure you can pay all your bills, loan and credit card payments, and other necessary expenses. The more salary you have, the more income you will have left over after your expenses that can be put towards things like saving for a vacation or saving for retirement.
If you have ever lived paycheck to paycheck, you don’t need me to tell you why having a good salary is important. While money alone won’t bring you happiness, it can ease the stresses that come with your personal finances. Having debt can be extremely stressful and expensive, but having a good salary can make sure that you have enough money in your bank account to pay it back.
In general, a higher salary typically equates to a higher standard of living. Having a good salary can mean financial stability for yourself and your family, as well as financial independence from debt. Overall, a good salary can be the difference between constantly stressing about your finances and having a stress-free life knowing all your financial obligations will be met.
One way to compare your salary to the rest of America is to look at the national average income in the country. The national average salary in the U.S in 2019 was $56,310 for one year, according to the Bureau of Labor Statistics.
Technically speaking, if your salary is under this line it may fall under the definition of unlivable wages. However, a salary under $56,310 could be perfectly fine for you if you live in an inexpensive area and you do not have many expenses.
Similarly, a salary over the $56,310 mark could be considered a comfortable living wage or an ideal wage. However, if you live in an expensive area with high costs, a salary like this could not be enough to get by.
While comparing your salary to the average national income can be helpful, defining a “good salary” by the national average is not perfect. The average income of $56,310 might be enough to live comfortably somewhere and might put you in severe financial hardship in another.
Again, the extent to which your salary is considered “good” is influenced by a variety of factors. These factors include things such as your age, location, education / experience, and the industry or job that you work in. Let’s take a deeper dive into these factors so you can start to know if your salary is good or not.
The average salary of a 20 year old will be different from the average income of a 50 year old. The difference in yearly income across ages can be attributed to things like how many hours someone works and how long they have been at their job. This is also likely due to the fact that older people have been working longer and have had more time to climb the ladders in their company.
By comparing your salary to the average salary of your age group, you can roughly determine whether your salary is a good salary or not. Here are the median yearly incomes by age according to the Bureau of Labor Statistics:
Teenagers of this age usually only work minimum wage jobs in the summer since they are typically in school for the rest of the year.
Earnings in this age group make a big jump from the younger age group. At this age, more people are working full-time jobs than the younger demographic and are earning an entry level salary. However, many people in this group are in college until they are about 22 and they might not have a job, so this might contribute to the annual income being a little low.
The average salary in this age group makes a big leap. By this age, most everyone has finished their college education and is working a full time job. By the latter end of this age group, people have begun to be promoted and earn higher salaries as a result. Also, individuals in this age group begin finishing their professional degrees which typically results in a higher salary.
This age group is in the heart of their working career, and as a result their average income is much higher than the younger age demographic. More promotions and higher salaries as a result are in store for these individuals as they continue to climb the ladders at their company. Unfortunately, this is also where the wage gap between men and women begins to increase.
At this age, the average salary begins to slow down dramatically. For whatever reason, people around this age make roughly the same amount of money at their jobs. This could be due to workers not being able to climb the ladders at their job as easily, leading to less and less promotion opportunities at their jobs.
This is about the age where people begin to leave their job and retire. Compared to the lower age group, there are far less people working a job.
64 + : $56,680
Just like the slightly younger age group, more and more people in this demographic quit their job and retire and begin collecting Social Security benefits.
Where you live is arguably the most important factor in determining whether your salary is good or not.
Cities and towns in America are not created equal. The costs of living, particularly rent and housing prices, vary greatly across cities. For example, the costs of living like renting an apartment down to a slice of a pizza will greatly vary from Mobile, Alabama to New York City. Obviously, the latter would be much more expensive.
Like we mentioned earlier, a salary will buy you much more in one place than the same salary in another place. Let’s look at the average income as an example.
If you make the average salary of $56,310 and live in San Francisco, one of the most expensive cities in the country, you are likely living paycheck to paycheck and are struggling to get by. However, if you live in Waco, Texas this might be a perfectly good wage that even allows you to have some expendable money to spend on entertainment.
This difference results from the cost of living, which is usually driven by the wages. The average wage in San Francisco is different from Waco, Texas, so the cost of living adjusts as a result.
As a general rule of thumb, the higher level of education you have achieved, the higher your wage will be. While this isn’t always the case, data shows that those who have completed higher levels of education have higher salaries than those with lower levels of education.
For example, someone with a high school education is likely to have a lower salary than someone with a college education. Similarly, someone with a masters degree is likely to have a higher salary than someone with just a basic college degree.
Depending on your education level, your salary may or may not be considered good. For example, a high school graduate making $60,000 a year is a much better salary for a person than someone with a masters degree making $60,000 a year.
Since experience equates to how long you have worked at a job or in an industry, it is somewhat related to your age. However, one person might be older than another and have less experience at a job or in an industry than someone that is younger.
In general, the more experience you have at a job the higher your salary will be. This tends to be because more experience at a job leads to promotions, which leads to higher salaries. Someone working a company for 5 years will typically have a lower salary than someone who has worked at the same company for 20 years.
According to earnings data, individuals working 2-5 years can expect to make around 30% more than someone who is just starting their career. As you gain more experience, this increases. Someone with more than five years of experience typically earrings about 35% more than someone with less than five years of experience.
If your starting salary at a job is the same as someone who has been working there for 20 years, you can pretty well assume you have a good salary. If instead you have worked at a company for 20 years and have the same salary as a newcomer, you probably have a weaker salary and it might be time to negotiate your salary.
The industry you work in and the specific company you work for within that industry can affect whether you are making a good salary or not. Two people can be the same age, live in the same area, have the same level of education and experience, and still have different wages if they work in different industries.
Certain industries have higher wages than others. For example, someone practicing law will likely make more than someone who is driving trucks. Even if someone has more experience in one industry, they may not make more money than someone in a different industry.
A $60,000 annual salary may be a high salary for someone in the truck driving industry but may not be good for someone practicing law or engineering.
In terms of the company, your company may pay wages that are above or below the industry average. Typically, larger companies tend to pay higher wages than smaller companies in the same industry. For example, being a delivery driver for one company might have a lower median wage than a delivery worker working for Amazon.
Based on these factors, you might feel like you don’t have a good enough salary relative to your age, location, education, experience, or industry. If you feel you are a hard working employee that has good habits of showing up to work on time with a good attitude, you might be in a position to negotiate a higher salary.
Successfully negotiating your salary can be difficult, but it is worth it. A jump in your salary could be the difference when it comes to being able to pay off all your bills and loan payments. Since we are not experts in this field, we will leave it to the Harvard Business Review to teach you how to negotiate salaries and job offers.
If you feel you are being relatively underpaid but your company is unwilling to budge in regards to your salary, you may want to explore other companies. If your company does not value the hard work and devotion you give to their company, there is a chance another company in your same industry will.