If a human resources officer talks about starting salaries, referring glibly to the "median salary for new hires" or the "mean salary for the industry," the mean salary may fall far short of the median or the median salary may surpass the mean. Understanding these two terms, mean and median, may save yourself a world of heartache and tens of thousands of dollars when you discuss salaries.
The Median
The median number in a series of numbers is the number in the middle. When someone talks about a median in statistics, he is talking about the number at the exact center point of a list of numbers. If the series of numbers has a length that's odd, a group of seven numbers rather than six, the middle number is the median. If the series of numbers has a length that's even, like a string of six numbers, then the middle is the average of the two numbers nearest the middle.
Mean
The "arithmetic mean," or the total of all the salaries, divided by the number of employees, is the mean -- the plain, old learned-it-years-ago-in-school "average." When applied to wages, the average salary is a comparison of all the salaries within a group, rather than a simple center point in a range of salaries. For example, an average salary for new hires is a comparison of all the salaries of every employee in that group. Called the "mean" in statistics, it's also called the "mean average." The mean may or may not be the equal of the median.
The Median Salary
The median salary is the salary at the center of all salary levels in a company. If 40 cleaners in a company of 60 employees makes $10,000, each of the 19 managers makes $25,000 and the CEO makes $3,000,000, the median salary is $25,000, because it's in the middle of the list of salaries. The median salary for a group may differ significantly from the average salary; it may be either higher than the average or lower than the average.
The Mean Salary
For the mean salary, add up the salaries in the list, then divide the sum by the number of employees in the group: 40 people making $10,000 plus 19 people making $25,000 plus one person making $3,000,000. Divide the sum -- $3,515,000 -- by 60, the total number of employees. The result, $58,583.33, is significantly larger than the median salary at the same company.
