Salary is the half of FairShare pay that differs between people, and so it is the half people will argue about. That is as it should be. The right answer to an argument about pay is a method that anyone can follow and check. This chapter gives one: a short ladder of bands that everyone in the company shares, the way any company can arrive at its figures, and the rules for what a band measures.
The ladder
The example company uses five bands.
| Band | Salary | People |
|---|---|---|
| Junior | $50,000 | 30 |
| Associate | $75,000 | 60 |
| Standard | $100,000 | 70 |
| Senior | $125,000 | 60 |
| Principal | $150,000 | 30 |
Four rules govern any FairShare ladder.
- One figure per band. There is no range such as $65,000 to $85,000. A range has to be settled by negotiation, and negotiation pays people for negotiating.
- One ladder for every function. Maintenance, design, sales, engineering and management all use the same bands. A person is placed by their mastery of their own function, so a maintenance lead who sets direction for the company’s buildings is a Principal and is paid as one.
- The figures follow from a method, set out next, and not from what other employers pay for a role.
- The figures are public inside the company, along with everyone’s band.
How the figures are set
Three inputs fix every figure on the ladder.
The floor. The lowest band is at least the living wage for a single adult where the company operates, taken from a published source. In the United States the MIT Living Wage Calculator gives a figure for every county.1 It is an hourly figure for full-time work of 2,080 hours a year, and the floor is that figure for the whole year, however many days the company’s own working year has. The example company’s $50,000 is a round number just above the calculator’s 2026 result for Travis County, Texas, where Austin is: $23.69 an hour, or $49,275 for the year.2 Dependants are not built into the floor, because Chapter 10 meets those costs with benefits. The MIT figure covers basic needs and leaves nothing for savings, so a council that wants its lowest-paid people to be able to put money aside adds a margin and publishes it.
The spread. The top band pays at most three times the floor. The charter fixes that limit.
The steps. The bands between rise in equal amounts. Each promotion is worth the same sum of money, whichever rung it starts from.
Together these give one formula. For a ladder of n bands with spread S, band k pays
\text{floor} \times \left(1 + (k - 1) \times \frac{S - 1}{n - 1}\right)
With five bands and a spread of three, each step is half the floor. A floor of $50,000 gives $50,000, $75,000, $100,000, $125,000 and $150,000. Other ladders follow the same way:
| Bands | Each band as a multiple of the floor |
|---|---|
| 3 | 1, 2, 3 |
| 4 | 1, 1.67, 2.33, 3 |
| 5 | 1, 1.5, 2, 2.5, 3 |
| 6 | 1, 1.4, 1.8, 2.2, 2.6, 3 |
A company therefore makes three choices: its floor, its number of bands and its spread up to the limit. Nothing else is set by hand.
Choosing the floor
The living wage is the minimum. A company that can afford more has to decide how far above it to go, and the decision is less obvious than it looks. Raising the floor raises every band in proportion, and the money comes out of the pool.
Suppose the example company had set its floor at $55,000 for 2027. Payroll would have been $2.5 million higher, the pool $1.75 million smaller, and each Future worth $366.67. The sum ignores tax.
| Band | Change in salary | Change in Futures payout | Change in total pay |
|---|---|---|---|
| Junior | +$5,000 | −$6,667 | −$1,667 |
| Standard | +$10,000 | −$6,667 | +$3,333 |
| Principal | +$15,000 | −$6,667 | +$8,333 |
In a profitable year a higher floor does something unexpected. It moves money up the ladder. Salary is spread three to one and the pool is shared equally, so every dollar moved from the pool into salaries favors the higher bands. In a year with no profit the same change is worth $5,000 to the Junior, who would otherwise have had nothing beyond salary.
The floor is therefore insurance for the lowest-paid, and it has a price in good years. The council sets it and publishes its reasoning. FairShare’s recommendation is that the floor be a wage a person can live and save on, and that profit above it travel through the pool.
What the company can afford
Nothing in the method so far asks what the company earns. It has to, because a ladder is a promise, and a promise the business cannot keep helps no one. One more sum settles it.
Take a year’s revenue and subtract every cost except salaries. Divide what is left by the number of full schedules, and then by the floor. The answer is the number of floors the company has to spend on each person, before it has paid anyone or kept any profit.
The example company has $55 million left: the $25 million it pays in salaries and its $30 million of net income. That is $220,000 a person, or 4.4 floors. Its ladder costs 2 of them. The other 2.4 are its profit.
What a ladder costs depends on its spread. When people are spread evenly around the middle band, as they are in the example, the average salary sits halfway between the floor and the top.
| Spread | Cost of the ladder, in floors per person |
|---|---|
| 3 | 2 |
| 2.5 | 1.75 |
| 2 | 1.5 |
| 1.5 | 1.25 |
Three cases follow.
- Less than one floor a person. The company cannot pay a living wage to everyone it employs. It cannot adopt FairShare without first raising its prices or changing its work. Chapter 14 describes the steps it can take in the meantime.
- More than one floor, but less than its ladder costs. The company narrows the spread until the ladder fits. A spread of one and a half is still a FairShare ladder. Little is left for the pool, so nearly everything the model does in such a company, it does through salary.
- More than its ladder costs. The ladder fits, and what remains is the profit that the reserve and the pool divide.
The example company’s figures were chosen to keep the arithmetic easy to follow, and 4.4 floors is a great deal. A company with 2.6 floors to spend could run the same ladder, and would have a quarter of the profit per person.
The council repeats the sum whenever it sets the floor or the spread, and publishes it.
A company that expects to afford its ladder but cannot pay it yet, because it is new or because a year has gone badly, logs the shortfall, as Chapter 12 describes.
What a band measures
A band measures mastery of a function. Three questions place a person, and they can be asked of any kind of work.
| Band | How much guidance? | How much of the function? | How far does their effect reach? |
|---|---|---|---|
| Junior | Follows instructions; needs regular direction | Set tasks | Their own tasks |
| Associate | Works alone on the familiar; asks about the new | The common cases | Their own work |
| Standard | Plans and carries out the work unaided | The full normal range | Their area; colleagues rely on them |
| Senior | Gives guidance to others | The hard and unusual cases | The team, and how the function is done |
| Principal | Sets direction | Problems nobody has met before | The function across the company |
The first two questions follow an established account of how skill develops. Stuart and Hubert Dreyfus described five stages, from novice to master, in which a person relies less on rules and more on experience as they improve.3 It drew on examples such as flying, chess and learning a language, and Patricia Benner later applied it to nursing.4 It describes skill, not any one occupation, which is what a single ladder needs. The third question is FairShare’s addition, because a company also has to recognize people who make those around them better.
A person is placed at the highest band where all three answers hold. Someone who works unaided and whose effect reaches the whole company, but who handles the normal range of the function and not its hard cases, is a Standard.
The rule matters most in a small company. Where there are two people, nobody is given guidance and everybody’s work reaches the whole company, so the first and third questions alone would make a Principal of each of them. The second question does not change with the size of the company. It asks how much of the function a person can handle, and the answer is the same in a firm of two as in a firm of two thousand.
The band is for mastery the company uses. Skill a person has but the role does not call on is not paid. A gifted pianist doing Associate-level accounting is an Associate.
Schedules and split roles
A band figure is the salary for a full schedule. How much of a schedule exists depends on how much of the work the company needs.
- Part of a schedule is paid in proportion. Someone needed two days in five earns two fifths of the band figure and two fifths of the Futures.
- A split role is paid as a blend. Someone who does Principal-level work two days a week and Junior-level work three earns 0.4 × $150,000 + 0.6 × $50,000, which is $90,000.
- Work needed only now and then belongs to a supplier. Chapter 13 draws that line.
Mastery sets the rate and demand sets the days.
That leaves a gap, and it should be stated. The floor is a living wage only on a full schedule. Someone needed three days in five earns three fifths of it, and where the days rise and fall with the work coming in, nobody can say in January what the year will pay. For roles like that, FairShare asks two things of the company.
- A guaranteed schedule. Before the year begins the company publishes, for each role, the days it will pay for whether or not the work arrives. They are paid like any other scheduled day, in salary and in Futures, and a person can plan a year around them. Days beyond the guarantee are added as the work comes in.
- A published rule for the extra days. A day is both salary and a Future, so whoever draws up the schedule is deciding what colleagues earn. The extra days are offered by a rule everyone can read, such as rotation among the people qualified to do the work.
The guarantee is a cost the company carries through a slow year. That is its purpose: the risk of a thin month moves from the person with the least room for it to the company as a whole.
Hours and conditions
Pay follows level, time and the company’s result. It does not follow anyone’s estimate of how hard a person tries. We would all like effort to be rewarded, and nobody has found a way to see it. Every measure of individual effort ends up rewarding whoever looks busiest, and it brings back the negotiation that bands remove. Two differences in effort can be measured honestly, and FairShare accounts for both.
- Longer hours. The company defines a standard day, eight hours in the example. Scheduled time beyond it is paid in proportion, in salary and in Futures. Only scheduled time counts, so nobody raises their share by staying late, and the company has to schedule and pay for the extra time it really needs.
- Harder conditions. Night work, dangerous work and physically punishing work have a shorter standard day for the same salary and the same Future. In the example company a six-hour night shift counts as a full day. The council publishes the list, which attaches to conditions and never to a function or a person.
Hard conditions are met with time and not with money for the same reason that personal costs are met with benefits: the band figure keeps one meaning for everyone.
What is left is individual intensity. Two people in the same band on the same schedule are paid the same, even if one works harder. Sustained extra contribution moves a person up a band. Short of that, it is rewarded only through the pool they share with everyone else. That is a cost of the model, and some people will feel it keenly.
Management is a function
Managing people is a discipline of its own, with its own Junior and its own Principal. Someone new to leading a team is a Junior or Associate manager, however senior they were in the work they did before. Moving from one function to another resets the evaluation in the same way: a Senior designer who becomes a product manager is placed where their product management stands.
This applies at the top. The chief executive sits in a band like everyone else. In the example company a chief executive at Principal earned a $150,000 salary and an $80,000 Futures payout for 2027, the same payout as the newest Junior.
Placement
A person’s band is decided by the people who work with them and their manager, against the three questions. It reflects what the person does consistently, and one exceptional project does not change it.
Placement is reviewed on a fixed cycle, twice a year in the example company. Anyone may ask to be reviewed at any cycle. A new hire is placed the same way. The offer is the band figure, and it is not negotiable.
Inflating a placement has a visible cost. Salaries come out of net income before the pool is calculated, so every unearned promotion reduces what each Future pays. The people deciding a placement are the people who pay for it.
Raises
No one’s salary rises for time served. A salary changes in two ways. The person moves to a higher band, or the floor moves and the whole ladder moves with it. The floor is revised when the published living wage changes, which is how the ladder keeps up with the cost of living.
Because the spread and the steps are fixed, the council cannot raise one band alone to attract a particular hire. If Principal has to pay more, the floor has to rise and every band rises with it.
Someone who outgrows the top band has reached the top of the salary ladder. Their Futures continue like everyone’s.
Precedent
Each part of this has been tried somewhere.
- Fixed, published pay. Buffer, a software company, has published every salary and the formula behind it for about a decade and does not negotiate.5
- Transparency narrowing gaps. When Denmark required firms to report pay by gender, the pay gap in the affected firms fell by about two percentage points, mostly because men’s wages grew more slowly.6
- A capped spread. In the Mondragon cooperatives of the Basque Country, no manager may earn more than six times the pay of the lowest-paid worker in the same cooperative, and the limit can be changed only by a vote of the members.7
Mondragon’s limit is reported to have begun at three to one and to have been widened twice. That is a warning about how hard a narrow spread is to hold. This paper knows of no company that combines a spread of three with fixed, published figures and a single ladder. The combination is a proposal, and it is untested.
What this costs
Some people will earn less in salary than they could elsewhere, and some of them will leave or never join. That is most likely in functions where other employers pay far above the top band. Chapter 16 returns to this.
Notes
- Glasmeier, A. K., & Massachusetts Institute of Technology. Living Wage Calculator: What is a living wage and how is it estimated? https://livingwage.mit.edu/pages/methodology
- Living wage data sourced from the Living Wage Institute via https://livingwage.mit.edu/counties/48453. Accessed on November 12, 2026. The figure is for one adult with no children, and the page was last updated on February 15, 2026.
- Dreyfus, S. E., & Dreyfus, H. L. (1980). A Five-Stage Model of the Mental Activities Involved in Directed Skill Acquisition. Operations Research Center, University of California, Berkeley.
- Benner, P. (1984). From Novice to Expert: Excellence and Power in Clinical Nursing Practice. Addison-Wesley.
- Buffer. Transparent salaries. https://buffer.com/salaries. See also Buffer. (2024). Introducing our Open Salary System: Reflecting on a Decade of Transparent Salaries at Buffer. https://buffer.com/resources/salary-system/
- Bennedsen, M., Simintzi, E., Tsoutsoura, M., & Wolfenzon, D. (2022). Do Firms Respond to Gender Pay Gap Transparency? The Journal of Finance, 77(4), 2051–2091.
- In this Spanish town, capitalism actually works for the workers. (2024, May 13). The Christian Science Monitor. https://www.csmonitor.com/Business/2024/0513/income-inequality-capitalism-mondragon-corporation. See also Co-operative approaches to pay. Co-op News. https://www.thenews.coop/co-operative-approaches-to-pay/