TL;DR
- Median pay is the pay of the person in the middle when everyone is ranked from lowest paid to highest. The Office for National Statistics defines the median as the value in the exact middle of the observed values when they are ranked from lowest to highest, and calls it its preferred measure of average earnings because it is less affected by a relatively small number of very high earners than the mean.
- The mean is the total pay divided by the number of people. A few very high salaries pull the mean up and leave the median where it is, which is why the two can differ a great deal in the same organisation. The UK gender pay gap guidance requires both, and sets out the median calculation step by step: sort by hourly pay, take the middle value, and if there is an even number take the mean of the two middle values.
- HR uses the median to benchmark a role against the market, to report pay gaps, to set the midpoint of a pay band and to describe pay honestly to a board. Quote the median for typical pay, the mean when you need the total, and both when the difference between them is itself the story.
“Average pay” is two different numbers, and the wrong one can mislead a board, a pay-gap report or a salary negotiation. Median pay is the one statisticians prefer for describing what a typical person earns, and the one UK employers must publish alongside the mean in gender pay gap reports. This article gives the definition, the calculation, a worked example, the difference from the mean, and the places HR uses it.
The definitions and calculation steps come from the Office for National Statistics and the UK government's gender pay gap guidance; the worked example is invented and labelled as such.
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Median pay definition
Median pay is the pay of the middle person when everyone in the group is lined up in order from lowest paid to highest. Half the group earn less than the median and half earn more.
The Office for National Statistics defines it in its earnings glossary: “The median is calculated by identifying the exact middle point in a set of observations. When the observations are ranked from lowest to highest, the median is the value in the exact middle of the observed values.” It adds why it uses it: “It is our preferred measure of average earnings, as it is less affected by a relatively small number of very high earners than the mean.”
The word “average” covers both the median and the mean. When a report says average pay, ask which.
Median versus mean
The mean is the total pay of the group divided by the number of people in it. The median is the middle person's pay. In a group where pay is spread evenly, the two are close. In a group with a few very high earners, which describes most organisations and most countries, the mean sits above the median, because the high salaries add to the total without moving the middle person.
| Measure | How it is found | What it tells you | Moved by a few very high earners? |
|---|---|---|---|
| Median | The middle value when pay is ranked | What a typical person earns | Barely |
| Mean | Total pay divided by the number of people | Total pay per head; the payroll's average | Yes, upwards |
Neither is wrong. The mean answers “what does the payroll cost per head?”; the median answers “what does a typical person here earn?”. Pay-gap reporting needs both, because the gap between the two measures is itself informative: a large mean gap with a small median gap usually means a few very highly paid people of one sex at the top.
How to calculate median pay
The UK government's gender pay gap guidance sets out the method, which works for any group: “The median is the middle point of a range of numbers arranged in order. If there is an even number in the range, the median is the mean (average) of the 2 middle numbers.”
- Sort. List everyone in the group in order of pay, lowest first and highest last. For pay-gap reporting the guidance uses hourly pay, so that part-time and full-time employees can be compared.
- Find the middle. With an odd number of people, the median is the middle person's pay.
- If the number is even, take the two people in the middle and use the mean of their pay.
- Compare with the mean if you need to explain the shape of the distribution.
A worked example
These figures are invented to show the arithmetic; they are not statistics for any organisation.
Nine people in a team earn, in thousands per year: 24, 26, 27, 28, 30, 31, 33, 36 and 95.
- Median: sorted already; the fifth of nine is the middle, so the median is 30.
- Mean: the total is 330, divided by 9 is about 36.7.
One salary of 95 lifts the mean nearly seven above the median. Remove that person and the median moves from 30 to 29, while the mean drops to about 29.4. The median described the typical team member both times; the mean described the payroll.
With ten people, add a tenth salary of 34: the two middle values are now 30 and 31, so the median is 30.5.
Quartiles, percentiles and the median
The median is also the 50th percentile: the point below which half the values fall. The same ranking gives the other landmarks HR uses:
- Lower quartile (25th percentile): a quarter of people earn less. Often used as the bottom of a market range.
- Upper quartile (75th percentile): three quarters earn less. Often used as the top of a range or a target for critical roles.
- Decile points (10th and 90th percentiles): the edges of the distribution, excluding the extremes.
The gender pay gap guidance also asks employers to report the percentage of men and women in each hourly pay quarter, which is the same ranking cut into four equal groups.
Where HR uses the median
- Benchmarking. Salary surveys report the median for a role, usually with the lower and upper quartiles. Matching a role to the market median is the usual starting point; paying at the upper quartile is a deliberate decision for roles that are hard to fill. Our post on benchmarking explains the method.
- Pay gap reporting. UK employers within scope must publish mean and median gender pay gaps for hourly pay and for bonus pay, the percentage of men and women in each pay quarter and the percentage receiving a bonus. The median gap is the figure least affected by a few outliers at the top.
- Pay bands. The midpoint of a band is often set at the market median for the roles in it, with the range running from a set percentage below to a set percentage above.
- Describing pay to the board and to staff. “Our median salary is X” is a more honest description of typical pay than the mean, and the two together show how concentrated pay is at the top.
Frequently asked questions
What does median pay mean?
The pay of the middle person when everyone in the group is ranked from lowest paid to highest; half earn less and half earn more. The Office for National Statistics defines the median as the value in the exact middle of the observed values when they are ranked from lowest to highest.
Why is the median used instead of the mean for pay?
Because a small number of very high earners pull the mean up without moving the median, so the median gives a better picture of what a typical person earns. The ONS calls the median its preferred measure of average earnings for that reason. The mean remains useful for total cost per head.
How do you calculate median pay with an even number of employees?
Sort everyone by pay, identify the two people in the middle, and take the mean of their pay. The UK gender pay gap guidance states the rule: if there is an even number in the range, the median is the average of the two middle numbers.
Is the median the same as the 50th percentile?
Yes. The median is the point below which half the values fall, which is the 50th percentile. The lower and upper quartiles are the 25th and 75th percentiles, found from the same ranking.
Do UK employers have to report median pay?
Employers within the scope of gender pay gap reporting must publish both mean and median gender pay gaps for hourly pay and for bonus pay, along with the proportion of men and women in each pay quarter and the proportion receiving bonuses. Check the current guidance for who is in scope.
Your next step: know which average you are quoting
- When you see “average pay”, find out whether it is the median or the mean.
- Benchmark roles to the market median and decide deliberately when to pay above it.
- Report the median and the mean together where the gap between them tells a story.
- Set pay band midpoints from the median and review them on a schedule.
For a policy that sets out how pay decisions are made and explained, read and download our compensation policy guide. The guide is free to read, and the PDF uses our short download form.
Want the performance evidence behind pay decisions kept in one place, so the median you report is one you can defend? Book a New Dynamics demo and bring your current review process. You can also email contact@new-dynamics.com.
