How to read P25, P50, and P75 in a salary report
The P50 team
Published
P25, P50, and P75 are the 25th, 50th, and 75th percentiles of pay for one job. P25 means 25 percent of workers in that job earn less than that number, P50 (the median) means half earn less, and P75 means 75 percent earn less. Those three numbers are the core of almost every salary report. Below we walk through one example with 20 salaries, explain why surveys lead with the median, and cover the mistakes we see most often. (New to surveys? Start with what is a salary survey.)
What a percentile is, in plain words
Line up everyone who holds a job, from lowest pay to highest. A percentile is a mark on that line. The 25th percentile is the pay where 25 percent of people are below and 75 percent are above. The 50th is the middle. The 75th is where 75 percent are below and 25 percent are above. The Bureau of Labor Statistics uses the same idea. In its example, at the 25th percentile "25 percent earn less than $15.00; 75 percent earn more than $15.00" (BLS OEWS percentile wage estimates).
Here is a worked example. Say 20 staff accountants at different companies report these base salaries, sorted from low to high. The numbers are made up.
52,000, 54,000, 55,000, 56,000, 57,000, 58,000, 59,000, 60,000, 61,000, 62,000, 63,000, 64,000, 65,000, 66,000, 68,000, 70,000, 72,000, 75,000, 80,000, 110,000
- P50 (median). With 20 numbers, the middle sits between the 10th and 11th values, $62,000 and $63,000. The median is $62,500.
- P25. Take the lower half (the first 10 numbers) and find its middle, between $57,000 and $58,000. P25 is $57,500.
- P75. Take the upper half (the last 10) and find its middle, between $68,000 and $70,000. P75 is $69,000.
Spreadsheet tools split the gap between two values in slightly different ways, so your software may land a few hundred dollars off. The idea is the same.
Why the median and not the average?
Because the average is easy to pull. Add up the 20 salaries above, divide by 20, and you get $65,350. That is $2,850 above the median, and much of that gap comes from the one person making $110,000. Now imagine that person made $150,000 instead. The average jumps to $67,350. The median does not move. It is still $62,500, because the same person is still at the top of the line.
That is the case for the median. A survey should tell you what a typical employer pays, and one unusual number should not swing it. BLS defines its median wage as "the boundary between the highest paid 50 percent and the lowest paid 50 percent of workers in that occupation" (BLS OEWS FAQ). Most surveys show the average too. If it sits far above the median, a few high earners are in the data.
P50 is named for the median. It is the number we think every employer should be able to see for every job.
What the gap between P25 and P75 tells you
The space between P25 and P75 holds the middle half of all workers in the job, so the size of that gap tells you how spread out pay is. In the example, P25 is $57,500 and P75 is $69,000. The gap is $11,500, or about 18 percent of the median. That is a fairly tight range, which fits a job like staff accountant where duties look alike from one company to the next.
A wide gap (say, P75 is 50 percent higher than P25) means something else is going on. Usually one of these:
- The job covers a range of experience, from new grad to 10-year veteran.
- The data mixes regions or industries with different pay.
- Companies matched different jobs to the same survey title.
A narrow gap means the market mostly agrees on what the job pays. A wide gap means you should look at the cuts (region, industry, company size) and at how well your job matches the survey job. How we calculate explains the cuts we publish.
How to compare your pay to the three numbers
Take what you pay a person (or the midpoint of your range) and see where it falls.
| Where your pay lands | What it usually means |
|---|---|
| Below P25 | You pay less than three out of four employers in the data. Expect harder hiring and more turnover, unless your job, location, or hours differ. |
| Between P25 and P75 | You are in the middle half of the market. Most employers aim here. Closer to P25 is a bit under market, closer to P75 a bit over. |
| Above P75 | You pay more than three out of four employers. Fine if the role is critical, the person is a top performer, or your region runs high. Worth a check if it was not on purpose. |
None of these is a verdict. Below P25 for a new hire in a low-cost town may be exactly right, and so may above P75 for a 20-year employee. The percentiles tell you where you stand, not what to do.
Common mistakes
Treating P50 as the right pay. P50 is the middle of the market, not a target everyone must hit. Plenty of employers pay near P40 or P60 on purpose. What matters is that you know where you are.
Comparing an hourly rate to an annual number. Most survey reports show annual base pay. If your person is paid $30 an hour, convert first. BLS turns hourly rates into annual ones using "a typical work year of 2,080 hours," which is 40 hours a week for 52 weeks (BLS OEWS technical notes). So $30 an hour is $62,400 a year. Watch for jobs that are not year-round. BLS notes that teachers, pilots, and flight attendants "do not work 2,080 hours per year" (BLS OEWS technical notes).
Mixing base pay and total cash. Base pay is the salary or hourly wage alone. Total cash is base plus bonus, commission, and other cash paid during the year. A report may show percentiles for both. Compare base to the base column and total cash to the total cash column, or you will look underpaid when you are not.
Reading one number without the count. Check how many companies and employees sit behind a line. A P50 built from six employees at two companies is a hint, not a market rate. Our sample report shows the counts beside every number.
One job, read line by line
Here is one line of a report, using the made-up staff accountant numbers from above.
| Job | Companies | Employees | P25 | P50 | P75 |
|---|---|---|---|---|---|
| Staff accountant (made-up example) | 14 | 20 | $57,500 | $62,500 | $69,000 |
Read it this way: 20 employees at 14 companies reported. A quarter earn under $57,500, the typical one earns $62,500, and a quarter earn over $69,000. The middle half sits between $57,500 and $69,000, a spread of about 18 percent.
If you pay your staff accountant $60,000, you are a little below the median and inside the middle half. If you pay $55,000, you are below P25, and it is worth asking why.
Where P50 fits
P50 takes its name from the median because that is the number we think matters most. Our reports show P25, P50, and P75 for every job that clears our minimum-company rules, with the counts beside them, so you can read them the way this article describes. How we calculate spells out the math.
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