Are You Being Underpaid? How to Find Out

Most people suspect they are underpaid. Many actually are. According to PayScale research, roughly 30% of workers are paid below the market rate for their role, experience, and location. But suspecting it and proving it are different things. If you want to take action — whether negotiating a raise or evaluating a job change — you need data, not gut feelings.

Here is a systematic approach to determine if you are being underpaid, and what to do about it.

Step 1: Define Your Market Rate

Your "market rate" is what an employer would need to pay to hire someone with your skills, experience, and role in your geographic area. It is not a single number — it is a range. You need to determine where you fall in that range.

Start by defining these parameters precisely:

• Job title and level: "Software Engineer" is not specific enough. "Senior Software Engineer" or "Software Engineer III" matters. Title inflation at some companies means your "Senior" role equals a "Staff" role elsewhere.
• Years of experience: Total years in the field, plus years in the specific role or technology
• Industry: A marketing manager at a tech company earns differently than one at a nonprofit
• Company size: Startups, mid-market, and enterprise companies pay different ranges
• Location: A data analyst in New York City has a different market rate than one in Des Moines

Use our salary lookup tool to get a quick benchmark for your role and location, then cross-reference with the sources below.

Step 2: Gather Data from Multiple Sources

No single data source is perfectly accurate. Triangulate from at least three:

Bureau of Labor Statistics (BLS)

The BLS Occupational Employment and Wage Statistics program publishes median wages by occupation and metropolitan area. This is the most reliable dataset because it comes from employer surveys, not self-reporting. The downside is that data can lag 12-18 months and uses broad occupational categories.

Glassdoor and Indeed

Self-reported salary data with company-specific breakdowns. Useful for comparing your pay to others at your specific company or similar companies. Take individual data points with a grain of salt, but the aggregated ranges are directionally accurate.

Levels.fyi (for tech)

The gold standard for technology compensation data. Includes base salary, stock, and bonus broken down by company and level. If you work in tech, start here.

LinkedIn Salary Insights

LinkedIn has a large dataset of self-reported salaries filtered by title, location, and experience. The advantage is sample size. The disadvantage is that people who update LinkedIn tend to skew toward higher earners.

Recruiter Outreach

If recruiters contact you on LinkedIn, ask about the salary range for the role. This is live market data — what companies are actually willing to pay right now, not historical averages.

Step 3: Adjust for Location

Raw salary numbers are meaningless without location context. A $90K salary in Nashville has more purchasing power than a $120K salary in San Francisco. When comparing offers or benchmarks across cities, always adjust for:

• State and local taxes: A $100K salary in Texas (0% state tax) yields roughly $76,500 after tax. The same salary in California yields roughly $67,500. That is a $9,000/year difference before you spend a dime.
• Cost of living: Housing is the biggest variable. Median rent in SF is 2-3x median rent in most Midwest cities.

Use our salary converter to translate any salary between cities, accounting for both taxes and cost of living. If you are comparing a $95K offer in Austin to your current $85K in Indianapolis, the converter will show you which one leaves more money in your pocket.

Step 4: Look for Warning Signs

Beyond the numbers, several qualitative signs suggest underpayment:

• Your company is hiring for your role at a higher salary: Check job postings on your company's careers page. If they are advertising your role at $10K-$20K more than you earn, that is a red flag.
• New hires in your role make more than you: Salary compression is common — companies raise starting salaries to attract talent without adjusting existing employees.
• You have not received a raise in 2+ years: With cumulative inflation, two years without a raise means your real pay has likely dropped 8-12%.
• You took on significant new responsibilities without a title or pay change: "Scope creep" without compensation is a form of underpayment.
• Colleagues at similar companies with similar experience earn notably more: Professional networks and industry communities often share ranges informally.

Step 5: What to Do About It

If your research confirms you are underpaid, you have three options:

Option A: Negotiate Internally

Present your market data to your manager and request an adjustment. Frame it as a correction, not a favor. Include BLS data, competitive postings, and your contributions. Be specific about the number you want.

Option B: Get an Outside Offer

An external offer is the strongest negotiation leverage. Apply to comparable roles, go through the process, and use the offer to negotiate. Be prepared to actually take the offer if your current employer does not match — bluffing damages trust.

Option C: Change Jobs

Switching companies remains the fastest path to a significant salary increase. Data consistently shows that job changers earn 10-20% more than those who stay and negotiate. If your employer consistently underpays relative to market, the culture is unlikely to change.

Use our job offer comparison tool to evaluate the full picture — salary, benefits, taxes, and cost of living — when comparing your current role to an external opportunity. And check the salary lookup tool to make sure any new offer is actually at or above market rate, not just above your current underpaid level.