How to Set Pay Rates When You Have No Salary Data and No HR Department

Deciding what to pay your first or next hire is one of the most uncomfortable moments in running a small business. Set the number too low and your offer gets rejected, or the person accepts and leaves in three months. Set it too high and you build a payroll you cannot sustain. Most guides assume you have access to compensation databases or an HR team. This one assumes you have neither.

The good news is that enough free and low-cost public data exists to get you to a defensible starting range in an afternoon. Here is a practical process, step by step.

Step 1: Start With Government Wage Data

The U.S. Bureau of Labor Statistics publishes the Occupational Employment and Wage Statistics (OEWS) program, which reports median and percentile wages by occupation and by metropolitan area. It is free, updated annually, and covers hundreds of job categories from bookkeepers to electricians to customer service representatives.

Go to bls.gov and search for your occupation. Look at the 25th, 50th, and 75th percentile wages for your metro area specifically, not the national figure. A bookkeeper in rural Ohio and a bookkeeper in San Francisco are doing similar work, but the local labor market sets very different rates. Use the metro-level data as your anchor.

The BLS data skews toward larger samples and may lag the current market by 12 to 18 months, so treat it as a floor and a frame, not a final answer.

Step 2: Cross-Check With Job Posting Data

Several job platforms now display pay ranges on listings, partly because a growing number of states require employers to post salary ranges. Even if your state does not require it, many postings include ranges voluntarily.

Search for your role on Indeed, LinkedIn, and Glassdoor using your city or zip code. Filter for businesses that look like yours in size and industry. Note the ranges that appear across eight to twelve listings. You are looking for where most of them cluster, not the outliers at either end.

If you see a wide spread, for example $18 to $28 per hour for a similar role, look at what distinguishes the higher-paying listings. They often specify more experience, a specialized software skill, or a license requirement. That context helps you understand which part of the range applies to the role you are actually filling.

Step 3: Account for Total Compensation, Not Just Base Pay

A common mistake small-business owners make is comparing their base hourly rate or salary to a competitor's base without accounting for benefits. If a larger employer is paying $20 per hour but also offering health insurance, paid time off, and a retirement match, the real cost to that employer is closer to $26 or $28 per hour in total compensation.

If you cannot match a larger employer's benefits package right now, that is honest and manageable. The key is to know the difference so you can have a transparent conversation with candidates. A candidate who understands they are accepting $22 per hour with no benefits, and why, is more likely to stay than one who discovers the gap after their first paycheck.

The BLS also publishes an Employer Costs for Employee Compensation summary that shows, on average, what employers spend on wages versus benefits by industry. It can help you estimate what your effective cost will be once you add payroll taxes, workers' compensation insurance, and any benefits you do offer.

Step 4: Talk to Peers in Your Industry

Public data gets you close, but local context closes the gap. Other business owners in your industry who are not direct competitors are often willing to share rough pay ranges, especially in trade associations, local chamber of commerce groups, or industry-specific online communities.

A practical way to start this conversation is to share what you found in your research and ask whether it matches what others are seeing. Something like: "I pulled BLS data and job postings and I'm landing around $19 to $22 per hour for a part-time office coordinator in our area. Does that match what you're seeing?" That framing is less awkward than asking someone to reveal their payroll outright, and it often produces a useful confirmation or correction.

If you belong to a trade association, many publish periodic wage surveys for their specific industry. These are often more relevant than broad BLS categories because they reflect the actual mix of duties in your sector.

Putting It Together: Setting Your Range

Once you have gathered data from the three sources above, plus any peer input, you should have a range you feel reasonably confident in. Here is a hypothetical example to illustrate how the steps connect.

Suppose you are hiring a part-time bookkeeper in a mid-sized Midwest city. BLS data for your metro shows the 25th percentile at $20 per hour and the median at $25. Job postings in your area cluster between $20 and $27, with the higher end tied to QuickBooks certification. You do not require certification. Peer conversations suggest $21 to $23 is common for small offices like yours. You might set your range at $21 to $24, with $21 as your starting offer for a candidate who meets your baseline and $24 available if the finalist brings a skill that genuinely matters to you.

Posting a range rather than a single number is worth considering. Candidates who see a range understand there is room for conversation, which can reduce negotiation friction and attract people who are serious about the role rather than the top number.

One Thing to Check Before You Post

Several states and cities now require employers to include a pay range in job postings or to provide one upon request. Requirements vary by location and sometimes by company size. Before you finalize your posting, check your state labor department's website or a state-specific employment law resource to confirm what applies to you. This is not legal advice, and requirements change, so a quick check takes five minutes and can save a compliance headache later.

A Note on Revisiting Rates Over Time

Whatever rate you set today should not be fixed forever. Labor markets shift, and a rate that was competitive 18 months ago may no longer attract candidates. Building a habit of checking BLS updates and scanning local job postings once a year, even when you are not actively hiring, keeps you from falling behind and facing a retention problem before you see it coming.