Why do companies have salary ranges — And you may be underpaid?

The salary range feels like a letter grade you get at school. If you get A+, you make more than any of your peers.

Source: 9gag

About Me

I’ve been working for about 5 years as a software engineer, and I always wonder why there are salary ranges for jobs.

The salary range fluctuates based on the interview performance, background, and seniority. That’s not it — I also have to negotiate to get a higher salary.

Companies give different salaries to employees within the same seniority and job function. Why do companies do this to us?

Why do companies offer salary ranges?

This gives companies an opportunity to offer a little more money to get an employee with a stronger background. In the same way, a pay structure template allows companies to potentially save on labor costs when hiring employees with limited backgrounds. By Chron.com

In our capitalist economy, employees are the most valuable intangible assets that provide the ROI (Return on investments) to the company. In order to attract the best talent in the job market, the salary range offers flexibility to provide higher compensation to qualified job candidates.

It depends on the type of job market you are in. If your job market is in high demand, companies fight viciously against each other for qualified candidates by offering much higher compensation. As a result, this causes internal issues regarding the pay gaps between new and existing employees and may result in a higher employee attrition rate.

What should you do if you are the victim of the severely underpaid?

Welcome to Corporate America. It sucks, I know.

The salary range feels like a letter grade you get at school. If you get A+, you make more than any of your peers! Good for you!

Though lower employee attrition rate is good for them, most companies do not proactively adjust the salary ranges based on the newly adjusted market data. If you are performing well and making a good impact on your team, communicate with your manager that you want compensation adjustments. If adjustments aren’t possible, get new job offers and negotiate. Make sure that the new job offers you have are the ones you will take.

If you truly want to get compensated for your hard work infinitely, become your own boss! Entrepreneurship is a high-risk and high-reward endeavor but it’s the best way to get the rewards based on the amount of effort you put in.


Companies should be transparent about their salaries, and there shouldn’t be a pay range for the same job function and seniority. It should be the pass and no-pass, not the letter grade like the ones in school. Existing employees should also have salary adjustments when there are changes to the latest compensation structure.

Final Remarks

Thanks for reading! I’d like to hear your thoughts and opinions on this so feel free to leave comments. Good luck with your career journey :)

P.S: If you like this article, don’t forget to hit the follow button!

Live life to the fullest,

Stephen Sungsoo Lee



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Stephen Lee (Sungsoo)

Stephen Lee (Sungsoo)

Software Engineer 🇰🇷 🇺🇸 | Avid Traveler — Writes about my travel, career, and personal finance. 📍in California. https://linktr.ee/korean_cowboi