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What is a Pay Scale?

By Shannon Kietzman
Updated May 16, 2024
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A pay scale is a document or table designed to determine how much an employee will earn in his or her job. Many companies have a scale set up before hiring new employees, and they may show it to prospective employees before hiring them. In this way, the job seeker can get a good idea of how much he or she can expect to earn while working for the company or business.

Not every company uses a pay scale to determine employee wages. Some companies seem to arbitrarily decide how much pay they will give an employee to start working for the company. Subsequent raises are similarly determined. Sometimes, a company without a standard scale will determine the subsequent increases in pay based on job performance or the overall performance of the company in the past year.

Similarly, some companies do not have a formal pay scale that is shared with employees, but they do have a loosely created one to help them determine the amount of money they will offer to new employees. This informal scale may also be used by the company to determine how much of a pay increase will be offered to the employee.

Typically, a unionized company will use a pay scale. Often, it is presented in a table format. For careers requiring special education or training, the pay scale will generally have years of experience on the side and the amount of education or training completed on the top. The employee can then find the point where the these two factors meet in order to determine the amount of pay he or she will receive for the year. If the job does not require special education, the chart will just show the salary for a specific number of years of experience.

Union representatives meet with the company to determine the salaries presented on the pay scale. The scale itself is a part of the contract that the company and the union develop. The idea behind this is to ensure that all employees are treated fairly and receive equal pay for equal experience and education. In this way, favoritism in the form of increased pay is eliminated. Although the pay scale is most often associated with unionized companies and businesses, companies without a union sometimes use one as well.

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Discussion Comments

By anon293561 — On Sep 26, 2012

Can a company legally move the pay scale each year to avoid giving the step increases?

By cardsfan27 — On Apr 10, 2012

I worked for the US government for about 10 years, and I agree with one of the other pay grade criticisms. There are too many people getting paid too much or too little compared to their peers. I was a product of the federal system, but one of the other things I noticed is that once you start getting into supervisory positions, the pay scale increases a lot faster. I'm not saying none of them deserve their pay, but I feel like a lot of people are getting paid more by the government than what they would get in the private sector, and I'm not sure that's how it should be, especially with the benefits that come from working for the government.

Besdies the GS scale, the government also has a military pay scale. It basically works the same way. Depending on your rank and years of experience, you get paid a set about.

Overall, pay scales are good for people who like knowing how much they are going to make, but not for people who don't like their potential to be limited.

By kentuckycat — On Apr 10, 2012

@jcraig - I know what you mean. I've felt the same way for quite some time after I realized how much some of my high school teachers made. The other interesting part of it is that college professors may get "tenure," but it doesn't make them immune from punishment like it does with a high school teacher.

On a different note, the place I always think of pay scales with with the federal government. I assume every country probably has something like this. In the U.S. at least, all government employees use something called the GS pay scale. It is almost exactly what the article describes. Every job the government posts lists a pay grade, and the qualify for the position, you have to meet the requirements for that grade.

By jcraig — On Apr 09, 2012

One of the things I really don't agree with is having a teacher pay scale. Before the read the article, I wasn't really aware that it was usually unions that set pay scales, but knowing that makes education pay scales make more sense now.

I think in every profession, you should be paid based on your performance, not where you fall on a chart. I have worked with people who were excellent workers and were always held down, because they either didn't have the number of years of experience to be getting paid a fair amount or didn't meet some other arbitrary criterion. Meanwhile, other people who were horrible employees got paid just as much as the great employees just because the pay scale said so.

I think the same thing applies to teachers. If they know how much they are going to be making, what incentive is there for teachers to go above and beyond the call of duty? Let's face it, once they get tenure, they are nearly immune from being fired. No other business works like that, why should the one that educates our kids?

By TreeMan — On Apr 09, 2012

@wavy58 - I think that is how a lot of businesses do it now. I know when I worked at my old company, we had a scale that everyone had to follow.

I think one of the things that is sort of being implied, but isn't always necessarily true is that you will always be making the amount show on the pay scale. The scale is usually considered to be the maximum you can be making given your education and experience.

That being said, there are still opportunities for promotions and bonuses, and that is usually how companies sidestep people actually having a higher salary than their pay grade indicates. At least that is how it has worked at everyone company I have been a part of.

By wavy58 — On Apr 08, 2012

My boss uses a comparative pay scale to determine how much to offer new hires and how much of a raise to give existing employees. He doesn't want us to receive less than we are worth.

He has access to information about how much other people in our profession in the neighborhood are making during a given year. He uses this average to determine how much he should be paying us.

I like this sort of pay scale. It lets my boss stay current, and the fact that he uses it means he is open to giving us raises.

By Oceana — On Apr 08, 2012

@lighth0se33 - That's not so bad. While there are advantages to having a pay scale, there are also advantages to working for a small company, so I'm sure you are coming out all right in the end.

My husband works for a huge company with branches all over the nation, so he does have a pay scale. Before he was hired, he could clearly see how much he would start out making and how much extra he could earn every quarter. He also could see what his maximum salary could be.

The base pay could be supplemented by doing more than 100% production, so the scale was a bit complicated. Having so much potential to earn extra excited and motivated him. I think it's good he got to see a pay scale in the beginning.

By lighth0se33 — On Apr 07, 2012

I work for a small family-owned business, and they did not have any sort of pay scale to show me before I started. They told me what I would start out making, and they said that I would be eligible for a raise every year.

I was happy with that, because I knew that working for them would be different than working for a big corporation. Some of my friends were horrified that there was no pay scale, but my boss has been faithful to give me at least a small raise each year.

Some years are better than others, so some raises are better than others. I am all right with this, because I know my employer is making an honest effort to help me out and reward me for my work.

By anon78501 — On Apr 19, 2010

i would like to know how to build up a salary scale.

By anon63832 — On Feb 03, 2010

may i know a pay scale in academics?

By anon61019 — On Jan 17, 2010

may i know how a pay scale is developed? thanks!

By ahat79 — On Jun 09, 2009

i would like to know how to build up a salary scale.

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