Don't confuse the dollar amount of your salary with your
total compensation. Salary is only one term in the overall equation.
Consider, for example, a company that buys you lunch. Here in NY, lunch costs about $10 if you buy it yourself. If you're in the 25% tax bracket, that's worth $3,300+ in salary.
Do they provide daycare? Transportation costs? Paying for conferences? 401k matching?
Your friends that feel underpaid did a poor job of negotiating their total compensation. Next time they should sit down and do something along the following lines:
- list out every possible benefit a company might offer
- group the ones they personally care about (don't have kids? Then the daycare benefit is worthless)
- for the ones they care about, think about how much each one is worth in $ to them.
- think about what the minimum they would accept for that benefit, how much would make them happy, and how much would make the ecstatic.
- for the ones they don't care about, thik about how much it costs the company to pay for each
When it comes time to negotiate your compensation, always think in sets. Always word things in terms of how moving any one piece requires movement on a different piece. Give up the things in the "don't care" set for the equivalent value of something in the "want" set.
If they want to give you less money, you say you could agree to that, if they give you X number of vacation days. Or if they say they have free daycare, you say that you appreciate that, but since you don't have kids you would rather have "work at home Fridays" and a slightly larger 401k match.
Consider the total You are much more likely to get a larger total if you don't focus only on the money.
[edit: bad math]
(salary equivalent) = (daily cost * 5 days/wk * 50 wks/yr)
------------------------------------
( 1 - tax rate )
25% tax bracket
$ 5 lunch = (5 * 5 * 50)/(75%) = $1,667 salary
$10 lunch = $3,333
So if the company gives you lunch each day, it's worth $333 in salary for every dollar you
would have to spend to buy the same lunch. That ignores the fact that your income tax rate changes depending on your salary.