U.S. Bureau of Labor Statistics

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It Pays to be the Boss--Supervisory Wages in the National Compensation Survey, 2009

by James E. Smith
Bureau of Labor Statistics

Originally Posted: January 21, 2011

This article uses National Compensation Survey data to illustrate differences in annual wages for team leaders and first-line, second-line, and third-line supervisors in the United States and in the Census Divisions.

Data from the National Compensation Survey (NCS) show that the pay of team leaders and supervisors increases as their position in the corporate hierarchy rises. For example, team leaders of engineers in the United States averaged $106,833 per year in 2009, while first-line supervisors averaged $117,756, second-line supervisors averaged $131,074, and third-line supervisors averaged $160,554. Similar patterns can be seen for a number of other management jobs that include varying levels of supervisory responsibility. These jobs share another characteristic--their pay is typically higher than that of all but the most highly paid nonsupervisory workers in the same occupation. Team leaders of engineers averaged 23 percent higher than nonsupervisory engineers, who averaged $87,162 per year.

Annual earnings for different supervisory levels of managers are published by the NCS for the United States and for the nine Census Divisions. This article uses the 2009 NCS earnings estimates to highlight earnings differences among the supervisory hierarchies in civilian, private, and State and local government establishments. The article also analyzes the differences in supervisory pay among the nine Census Divisions. All data referenced are for full-time workers. The article also includes a comparison of 2009 supervisory data with 1997 data that was analyzed in a previous study published in 2000.

The NCS, which provides comprehensive measures of occupational earnings, compensation cost trends, the incidence of benefits, and benefit plan provisions, publishes an annual national bulletin on the occupational earnings of civilian workers--defined by the NCS as those who work in private industry and in State and local government establishments.¹

The NCS has published national data on the occupational earnings of the various supervisory levels of management workers annually since the 2006 survey year.² (Prior to 2006, a different classification methodology was used and supervisory earnings were not published.) The most recent data, for the 2009 survey year, include weekly and annual earnings estimates for managers, who are classified as team leaders and first-, second-, and third-line supervisors. Both the mean and median earnings, plus mean hours, are shown for the civilian sector (private industry and State and local government combined), private industry, and State and local government. Relative standard errors are available for each estimate.³

Determination of supervisory level

The NCS evaluates each surveyed job for work level, which is a classification of duties and responsibilities performed by the worker. In the NCS, occupations are evaluated for work levels 1 (the lowest) through 15 (the highest). Most supervisory occupations are evaluated based on their duties and responsibilities. A modified approach is used for professional and administrative supervisors when they direct professional work and are paid primarily to supervise. Such supervisory occupations are leveled based on the work level of the highest position reporting to them.⁴

The NCS program classifies supervisors according to their level of supervisory responsibility, regardless of titles:

• Team leaders, or lead workers, have the authority to make, coordinate, and review work assignments of employees performing the same general work as the lead worker on a day-to-day basis. Lead worker responsibilities may involve solving problems, providing instruction on work procedures, or providing input into performance evaluations.



• First-line supervisors direct their staff through face-to-face meetings and are responsible for conducting the employees’ performance appraisals.



• Second-line supervisors direct the actions of staff through intermediate supervisors. The organizational structure is divided into multiple subordinate groups that differ as to subject matter and function: there are formal procedures and administrative controls between supervisory levels and groups.



• Third-line supervisors direct the actions of staff through multiple subordinate levels of supervision. The organizational structure is complex with extensive formal coordination, clearances, and procedural controls between subordinate supervisory levels and organization sub-divisions.

Earnings of supervisors in the United States

Supervisory workers are found throughout the civilian sector. As table 1 illustrates, supervisors in the major group titled management occupations⁵ in civilian industries ranged from an average of $75,485 per year for team leaders to an average of $208,510 per year for third-line supervisors. Table 1 also includes four of the more than two dozen detailed managerial occupations that were published; these four occupations were selected because they are found in each industry sector published by NCS.

Earnings of supervisors in the Census Divisions

The National Compensation Survey also publishes wage data for each of the nine Census Divisions.⁶ Table 2 compares supervisory earnings in the nine Census Divisions. Estimates on third-line supervisors, when publishable, ranged from an average of $177,191 per year in the South Atlantic Census Division to an average of $238,749 per year in the East North Central Census Division.

Comparison to a 1997 study of supervisors

A previous study similar to this one analyzed unpublished 1997 NCS estimates, which reflect a different methodology in classifying levels of supervision.⁷ Despite the methodological differences, some broad comparisons can be made. Chart 1 illustrates the change in annual supervisory pay for management occupations between 1997 and 2009:

In 1997, first-line supervisors in the United States classified as executives, administrators, and managers⁸ averaged $54,558 per year; in 2009, those classified in management occupations averaged $84,460 per year. Second-line supervisors in 1997 averaged $73,070; in 2009 they averaged $118,880. Third-line supervisors averaged $126,714 in 1997; in 2009 they averaged $208,510.

Conclusion

In 2009, within management occupations in the civilian sector, mean annual earnings for those classified as first-line supervisors were 12 percent higher than those classified as team leaders. Annual earnings for second-line supervisors were 41 percent higher than those for first-line supervisors; and annual earnings for third-line supervisors were 75 percent higher than those for second-line supervisors. These ratios were about the same as they were in 1997.

James E. Smith
Economist, formerly with the Division of Compensation Data Estimation, Office of Compensation and Working Conditions, Bureau of Labor Statistics.
Telephone: (202) 691-6199.

Notes

1 The National Compensation Survey excludes agriculture, forestry, fishing and hunting, private households, Federal Government workers, and the self-employed. For more information, see BLS Handbook of Methods, chapter 8, “National Compensation Measures,” on the Internet at http://www.bls.gov/opub/hom/homch8_a.htm.

2 For NCS national earnings archives, see the National Compensation Survey Publications List, on the Internet at http://www.bls.gov/ncs/ncspubs.htm.

3 National Compensation Survey: Occupational Earnings in the United States, 2009, Bulletin 2738 (Bureau of Labor Statistics, June 2010), on the Internet at http://www.bls.gov/ncs/ncswage2009.htm. See tables 24, 25, and 26 for weekly and annual earnings and hours; and RSE tables 24, 25, and 26 for the relative standard errors.

4 The NCS determines a work level for each surveyed job using a “point factor leveling” process. Point factor leveling matches certain aspects, or factors, of a job to specific levels of work with assigned point values. Points for each factor are then totaled to determine the overall work level for the job. For a complete description of point factor leveling, see National Compensation Survey: Guide for Evaluating Your Firm's Jobs and Pay, (Bureau of Labor Statistics, October 2003), p. 3, on the Internet, at http://www.bls.gov/ncs/ocs/sp/ncbr0004.pdf.

5 Estimates of supervisors’ wages are published only for workers classified within management occupations, defined by the Standard Occupational Classification Manual, 2000, published by the U.S. Office of Management and Budget, as code 11-0000, which includes general and operations managers, financial managers, engineering managers, medical and health services managers, and other categories of managers. For more information, see “Archived Materials on the 2000 SOC,” on the Internet at http://www.bls.gov/soc/#archives.

6 The nine Census Divisions, and the particular areas that are studied, can be found in the individual publications located at http://www.bls.gov/ncs/ocs/compub.htm#Division.

7 James Smith, “Supervisory Duties and the National Compensation Survey,” Compensation and Working Conditions, spring 2000, on the Internet at http://www.bls.gov/opub/cwc/archive/spring2000art2.pdf. The NCS changed from a nine-factor system to a four-factor system with the September 2005 publications. See Paul Carney, “Converting from Nine Factors to Four in the Occupational Work Leveling System of the NCS,” September 29, 2004, on the Internet at http://www.bls.gov/opub/cwc/cm20040924yb01p1.htm.

8 The 2000 study analyzing 1997 data used an occupational classification system based on the 1990 Census of Population. That study presented average hourly rates for full-time executives, administrators, and managers classified as first-, second-, and third-line supervisors (see table 2 of the Spring 2000 Smith article); the annual earnings cited for this article were computed by multiplying 2,080 hours per year (40 hours per week and 52 weeks per year) by $26.23 per hour for first-line supervisors, $35.13 for second-line supervisors, and $60.92 for third-line supervisors.