Most professionals who suspect they're underpaid are right — workers who stay at one company for 2+ years earn up to 50% less over their lifetime than those who strategically move. The problem isn't awareness. It's that most people have never actually checked. This guide walks through The Underpaid Diagnosis — a 5-step process for calculating your real market rate using free tools (Glassdoor, BLS, Levels.fyi, recruiter conversations) — plus 10 warning signs, and a concrete action plan whether the answer is yes or no.
This article was researched and written by the Careery team — that helps land higher-paying jobs faster than ever! Learn more about Careery →
Quick Answers
How do you know if you are underpaid?
Compare your total compensation to market rate data from at least three sources: BLS Occupational Employment Statistics for your role, Glassdoor or PayScale for company-level data, and Levels.fyi or Blind for real reported salaries. Adjust for location, years of experience, and specialized skills. If your pay falls more than 10% below the 50th percentile for comparable roles, you are likely underpaid.
What percentage of workers are underpaid?
While exact figures vary, ADP research shows workers who stay at one company for 2+ years earn significantly less than those who switch strategically. Glassdoor reports that 56% of workers have never negotiated their salary — meaning most professionals have accepted whatever was first offered without testing their market value.
What should you do if you're underpaid?
Three paths: (1) Negotiate a raise at your current company using market data as evidence, (2) Switch companies for a 10-20% salary jump — new employers price you at current market rate, not your hiring anchor, (3) Add a high-value skill that qualifies you for higher-paying roles. The right path depends on the size of the gap and whether your company has the budget to close it.
How much of a pay gap is too much to fix internally?
If your pay is 10-15% below market, an internal raise conversation can often close the gap. If the gap exceeds 20%, switching companies is almost always faster and more effective — most internal raise processes cap at 10-15% even in the best case.
That nagging feeling that you should be earning more? It's probably not paranoia. It's pattern recognition.
Workers who stay at the same company for more than two years earn an estimated 50% less over their lifetime than those who move strategically. And 56% of workers have never once negotiated their salary. That means most professionals are being paid based on what they accepted years ago — not what they're actually worth today.
The gap between what you earn and what you could earn isn't a feeling. It's a number. And this guide will help you calculate it.
The average employee doesn't get underpaid because of a conspiracy. It happens because of two invisible forces that work against every worker who doesn't actively fight them.
The anchoring trap. Your salary is anchored to whatever number you accepted on day one. Every raise after that is a percentage of that number — not your current market value. Three years of 3% raises on a $60K starting salary gets you to $65,564. Meanwhile, the market rate for your role may have moved to $78,000. The anchor holds you down, and nobody in your company is incentivized to point that out.
The loyalty penalty. Conventional wisdom says loyalty gets rewarded. The data says the opposite. Companies budget 3-5% for annual raises but 15-20% for new hires competing with outside offers. Staying loyal doesn't make you valued — it makes you cheaper.
- The Loyalty Penalty
The loyalty penalty is the widening compensation gap between employees who stay at one company and those who change jobs strategically. Because internal raises are anchored to hiring salary (typically 3-5% annually), while external offers reflect current market rates (often 10-20% higher), long-tenured employees accumulate a growing pay deficit over time. Research from ADP and the Federal Reserve Bank of Atlanta consistently shows job-switchers out-earn job-stayers at every experience level.
The uncomfortable truth: feeling underpaid and being underpaid often look the same from the inside. The only way to know is to check. That's what the next section is built for.
Most underpayment isn't malicious — it's structural. Salary anchoring and the loyalty penalty create a growing gap between what loyal employees earn and what the market would pay them. The only defense is regularly checking your market rate with real data.
Gut feelings don't win raise conversations. Numbers do. The Underpaid Diagnosis is a 5-step process for calculating the exact gap between what you earn and what the market says you should earn — using tools that are free, publicly available, and take less than an hour total.
- The Underpaid Diagnosis
A 5-step framework for determining whether you are underpaid relative to market rate: (1) Gather compensation data from 3+ sources, (2) Adjust for location, experience, and skills, (3) Talk to recruiters for real-time market validation, (4) Check internal equity signals, (5) Calculate the dollar gap. The diagnosis produces a specific number — the annual amount being left on the table — which becomes the foundation for any negotiation or career move.
Gather compensation data from 3+ sources
No single source is reliable alone. Cross-reference at least three:
- BLS Occupational Employment and Wage Statistics (bls.gov/oes) — Tier 1 government data by role and metro area. The most trustworthy baseline.
- Glassdoor / PayScale — Company-specific salary reports based on employee submissions. Good for understanding what your employer pays.
- Levels.fyi — Real verified compensation data, especially strong for tech. Includes base, stock, and bonus breakdowns.
- Blind — Anonymous professional network where workers share real offer numbers and compensation details.
Write down the 25th percentile, 50th percentile (median), and 75th percentile for your exact role title.
Adjust for location, experience, and skills
Raw salary data without context is misleading. A $90K salary in Austin means something very different than $90K in San Francisco. Adjust for:
- Location: Use BLS metro-area data or Glassdoor's "knows your worth" location filter.
- Years of experience: Most roles have clear salary bands by seniority. A "marketing manager" with 3 YOE and one with 10 YOE are not comparable.
- Specialized skills: Niche or in-demand skills (cloud architecture, revenue operations, advanced data analytics) carry a premium that generic job titles don't capture.
Talk to recruiters — the free market rate check
This is the most underused move in compensation research. Responding to a recruiter message on LinkedIn and asking "What's the compensation range for this role?" costs nothing and produces the most current, real-world market data available.
Recruiters know exactly what companies are paying right now — not what they paid six months ago when Glassdoor data was submitted. A single 15-minute call can validate or invalidate everything you found in Steps 1-2.
Check internal equity signals
Your company won't publish everyone's salary. But there are signals that reveal whether coworkers in comparable roles earn more:
- New hires at your level being offered higher titles or better perks
- Job postings for your role that list a range above your current pay
- Colleagues who negotiated at hiring mentioning numbers you didn't get
- Coworkers with less experience getting promoted alongside or ahead of you
None of these proves inequity on their own. Together, they paint a pattern.
Calculate the gap
Take your current total compensation (base + bonus + equity) and subtract it from the 50th percentile of your adjusted market rate. That number is what you're leaving on the table — every single year.
- Gap under 5%: You're roughly at market. Focus on growth strategies rather than correction.
- Gap of 10-15%: A raise conversation, backed by data, can close this. Start with how to negotiate a raise.
- Gap of 20%+: Internal raises rarely close gaps this large. A strategic job switch is likely the fastest path.
The Underpaid Diagnosis turns a vague suspicion into a specific dollar amount. Cross-reference 3+ salary sources, adjust for your exact situation, validate with a recruiter call, check internal signals, and calculate the gap. That number is the foundation for every next step.
But salary data only tells part of the story. Sometimes the signs of being underpaid show up long before you run the numbers.
The pay gap isn't always obvious from the paycheck. These signals indicate your compensation has fallen behind — even if you haven't done the formal math yet.
- Job postings for your own role (at your company or competitors) list a higher salary range than what you earn
- You haven't received a raise beyond cost-of-living adjustments in 2+ years
- New hires on your team are being brought in at or above your current salary
- Recruiters consistently pitch roles with 15-20%+ higher compensation
- You've taken on significantly more responsibility without a title or pay change
- Coworkers with similar or less experience have been promoted while your pay stays flat
- Your company eliminated bonuses, froze raises, or reduced benefits — and never restored them
- You're told 'the budget doesn't allow it' every time compensation comes up, but hiring continues
- Your skills have grown substantially since your last salary was set, but your pay hasn't reflected it
- The discomfort you feel about your pay is persistent, not just occasional — that pattern recognition is usually right
Three or more of these? Run The Underpaid Diagnosis immediately. The data will tell you whether the feeling matches reality — and exactly how big the gap is.
Being underpaid often shows up in patterns before it shows up in spreadsheets: stale raises, new-hire salary inflation, growing responsibilities without growing pay, and recruiters offering significantly more. Trust the signals, then verify with data.
The diagnosis is done. Now comes the harder question: what to do about it.
Knowing the gap is step one. Closing it is step two. There are exactly three paths — and the right one depends on how large the gap is and how willing your company is to fix it.
Path 1: Negotiate now
If the gap is closeable internally (10-15%), a data-backed raise conversation is the lowest-risk move. The key: never frame it as a feeling. Frame it as a fact. "Here's the market data, here's the gap, and here's the case for a correction."
The complete playbook for building an undeniable raise case — with scripts, timing advice, and data templates: How to Ask for a Raise.
Path 2: Switch companies
If the gap exceeds 20%, or if your company has a pattern of denying raises, the math favors leaving. A strategic job switch resets your salary anchor to current market rate — something no internal raise process can match.
New employers don't know what you earned before. They price you at what the market says you're worth today. That single reset often closes the entire gap in one move.
When the offer arrives, don't accept the first number. The negotiation is where the real money is made: How to Negotiate Salary.
Path 3: Upskill and reposition
Sometimes the gap isn't about your employer underpaying — it's that the role itself has a ceiling. A marketing coordinator maxes out around $65K no matter who they work for. But a marketing analyst with SQL and data visualization skills starts at $85K.
Adding one high-value adjacent skill takes 3-6 months and can permanently shift your earning tier by $20-40K. The skill stack creates a rare profile that commands premium compensation.
For the complete strategy on reaching higher income brackets — including detailed case studies: How to Make $100K a Year.
Three paths close the underpayment gap: negotiate (if the gap is 10-15%), switch companies (if it's 20%+), or upskill to break into a higher-paying role category. The path you choose depends on the size of the gap, not just the existence of one.
Running the numbers and finding out you're at market rate is good news — but it doesn't mean the work is done.
Being fairly paid today doesn't protect you from falling behind tomorrow. Market rates shift. Skills appreciate and depreciate. The loyalty penalty compounds every year you stay without a market check.
Three moves keep you ahead of the curve:
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Re-run The Underpaid Diagnosis every 12 months. Market rates move 5-8% annually in hot fields. What was fair last year may be below market next year.
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Invest in visibility. Professionals who are known beyond their immediate team get better offers, faster promotions, and more negotiation leverage. Visibility is the single biggest multiplier on every other salary strategy. How to Brand Yourself covers the full playbook.
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Stack a high-value skill. Even at market rate, adding an in-demand adjacent skill shifts your earning ceiling. The goal isn't to fix underpayment — it's to create an overpayment-worthy profile.
If you're fairly paid but the growth trajectory is flat, timing a strategic exit matters. The data on optimal job-switching frequency: How Often Should You Change Jobs.
Being at market rate today is a snapshot, not a guarantee. Re-check annually, invest in visibility, and keep stacking skills. The professionals who earn the most aren't the ones who wait — they're the ones who stay informed and move strategically.
Key Takeaways
- 1The loyalty penalty is real: workers who stay 2+ years at one company earn up to 50% less over their lifetime than strategic job-switchers. Salary anchoring keeps your pay tied to what you accepted years ago, not what you're worth today.
- 2The Underpaid Diagnosis is a 5-step process: gather data from 3+ sources (BLS, Glassdoor, Levels.fyi), adjust for location and experience, validate with a recruiter call, check internal equity signals, and calculate the exact dollar gap.
- 310 warning signs — from stale raises to recruiter offers 15%+ above your pay — can reveal underpayment before you run the numbers. Three or more signals mean it's time to diagnose.
- 4Three paths close the gap: negotiate internally (10-15% gaps), switch companies (20%+ gaps), or upskill to break into a higher pay tier (3-6 months investment for $20-40K return).
- 5Even if you're fairly paid, re-run the diagnosis annually and invest in visibility and skill stacking — market rates shift, and staying static is how the loyalty penalty compounds.
Frequently Asked Questions
How do you ask for a raise when you're underpaid?
Lead with data, not feelings. Present your market research (BLS data, Glassdoor ranges, recruiter-confirmed rates), show the specific gap between your current pay and market median, and frame the request as a market correction rather than a personal favor. The full conversation framework is covered in How to Ask for a Raise.
Is it better to negotiate a raise or switch jobs?
If the gap is 10-15% and your company has the budget, negotiating is lower-risk and preserves your current benefits and tenure. If the gap exceeds 20%, or your company has a history of denying raises, switching companies is almost always faster and more effective. New employers set your salary at current market rate — no anchor to your old number. See How to Negotiate Salary for the external negotiation playbook.
What is a good salary for your experience level?
There is no universal number — it depends on role, location, industry, and specialized skills. The best approach is to check BLS Occupational Employment and Wage Statistics for your specific occupation and metro area, cross-reference with Glassdoor and Levels.fyi, and adjust for your years of experience. The 50th percentile (median) for your adjusted profile is the baseline. Below it means you're likely underpaid. Above it means you're competitive.
How often should you check your market rate?
At least once per year, and always before a performance review, a promotion conversation, or a job interview. Market rates in high-demand fields can shift 5-8% annually, meaning your salary can fall below market after just 12-18 months of no adjustments. The Underpaid Diagnosis takes less than an hour and costs nothing.
Can you be underpaid even at a big company?
Yes. Large companies often have rigid compensation bands that lag market movement, especially for employees hired 2+ years ago. Internal equity adjustments are rare, and the anchoring effect is the same regardless of company size. In fact, large companies with standardized pay scales may be slower to correct gaps than smaller companies with more flexible compensation.
Researching Job Market & Building AI Tools for careerists since December 2020
Sources & References
- Occupational Employment and Wage Statistics — U.S. Bureau of Labor Statistics (2024)
- Wage Growth Tracker — Federal Reserve Bank of Atlanta (2025)
- Glassdoor Survey: Salary Negotiation Insights — Glassdoor Economic Research (2024)
- Pay Increase and Turnover Report — ADP Research Institute (2024)