Question

Pay Range A: For a pay range midpoint equal to $47,500, calculate the minimum and maximum pay values for a 15% range spread Pay Range B: For a pay range midpoint equal to $53,750, calculate the minimum and maximum pay rates for a 25% range spread What, if any, is the overlap between Pay Range A and Pay Range B

Answer 1

Range Spread is the difference between minimum and maximum values of a Pay Range. Thus,

Pay Range Minimum = Pay Range Midpoint / (1 + 1/2 of Range spread)

Minimum of Pay Range A = 47,500 / (1 + (1/2 x 15%) ) = 47,500 / ( 1 + 7.5%) = 47,500 / 1.075 = $44,186 (Approx)

Minimum of Pay Range B  = 53,750 / (1 + (1/2 x 25%) ) = 53,750 / ( 1 + 12.5%) = 53,750 / 1.125 = $47,778 (Approx)

Pay Range Maximum = Pay Range Minimum x (1 + Range Spread)

Maximum of Pay Range A = 44,186 x ( 1 + 15% ) = 44,186 x 1.15 = $50,814 (Approx.)

Maximum of Pay Range B = 47,778 x ( 1 + 25% ) = 47,778 x 1.25 = $59,722.5 (Approx.)

Pay Range A = $44,186 - $50,814 .................Lower Grade

Pay Range B = $47,778 - $ 59,722.50......................Higher Grade

Overlap between Pay Ranges = (Maximum Pay of Lower Grade - Minimum Pay of Higher Grade) / (Maximum Pay of Higher Grade - Minimum Pay of Higher Grade)

= (50,814 - 47,778) / (59,722.50 - 47,778) = 3036 / 11,944.50 = 0.2542 = 25.42% (approx.)

So, Overlap between Pay Range A and Pay Range B is of 25.42% (approx.).