Let’s take a look at the bank accounts and pay stubs of three prominent people in America. One works for a good company, has a college degree, works almost 50 hours a week if you add in commuting and overtime, and makes $49,000 a year. The second person has probably the most important job in the country, works 20-hour days for four year spells at a time, and earns about $400,000 every year. The third person doesn’t really work at all, except being herself as cameras follow her around and posing for some photos, and made a bonkers $28 million last year.

Who are they? The first is a profile of the average worker in the United States, the second is our President, and the third is Kim Kardashian. While it’s no secret that famous people like actors, celebrities, entertainers and pro athletes make so much money, what – or who – determines why someone like Kim Kardashian is one of the highest paid people in the world, when our Commander in Chief makes about 30-times less than just the average CEO of any company? Why is it that hard-working people that are fundamental to the very fabric of our society like teachers, nurses, fire fighters, military personnel, electricians, etc. are paid a pittance compared to any grown man who can play a game involving hitting a baseball with a bat very well. It seems like there’s no rhyme or reason to it, but we’ll endeavor to outline some factors why people are paid what they are.

So what determines our pay?

1. How much revenue we bring in:
If you generate a large amount of cash based on your job performance, then you’re usually paid accordingly. This is a big factor why pro athletes, famous musicians, and actors get paid so well. Just by attaching Tom Cruises’s name to a film, the studios are virtually guaranteed of making a certain amount of money at the box office. And people will always pay big bucks to watch (or even wear the same jersey!) of someone like Michael Jordan. But another example of the revenue factor is that of salespeople. Often, sales people are paid extremely well, no matter how long they’ve worked at their current company or where they went to school. The reason is, of course, that they generate income for the company, and that determines their value.

2. Education:
There is some basic correlation between how much schooling we undertake and how well we get paid. Consider these average earnings, per the Bureau of Labor Statistics:

High school dropout: $451 per week
High school graduate: $638 per week
College graduate – bachelor’s degree: $1,053 per week
College graduate – graduate degree: $1,263 per week.

That may not seem like a huge difference, but just getting a college degree, no matter what school you attend or your major, can add up to $830,000 in extra earnings over the course of your life versus the average high school graduate.

3. Specialization:
As a general rule, the more finite the subject matter of your focus, the more accomplished (and better paid) you will be. So why is generalization not rewarded? The more defined your focus, the higher your level of expertise and the more you separate yourself from the competition. By focusing on one specific niche, the better you’ll be at it and your services will be more in demand. That is why brain surgeons make so much more than a general physician, and a college professor makes more than an elementary school teacher, yet most would argue the latter has a more difficult and important job.

4. Skill level:
The better you are at what you do, the more you’ll probably get paid. In some professions, the disparity between the average and the best workers is notable but not profound. If you’re a state worker or a cashier, for example, there may not be such a difference in skill to justify a huge pay range. But for other occupations, like professional athletes, the best of the best will be rewarded by obscene amounts of cash, while those who measure up a little short will be in the unemployment line. Think about the case of NFL football players; the most skilled quarterbacks earn more than $20 million a year yet the average player “only” earns $1.9 million. The same can be said of the best and most skilled pitchers in major league baseball versus the average position player.

5. Longevity:
Working at the same craft for a long time usually means that you’re better at what you do, so people with tenure or seniority often are paid more than “newbies.” For example, to be a well-paid chef, you’ll need years of experience working your way up the ranks of the restaurant world, and a police detective only reaches that designation after years and maybe decades spent in the lower ranks.

6. Rarity or uniqueness:
No one else could dream up and create Picasso’s art other than Picasso. The subtle tones of your favorite singer can be imitated, but never duplicated. If something is rare or even unique, it has a higher value IF it’s in demand. For example, air traffic controllers make a hefty $122,530 average wage even without extensive schooling or having to work their way up the corporate ladder for years. Their unique skills and the rarity of someone being able to handle the pressures and pace of that job warrant the big pay day.

7. The value we provide:
Point blank, the best way to ensure you get paid well is to make yourself invaluable. If they don’t want to loose you to greener pastures, your employer will eventually have to pay you what you’re worth. But if it’s easy for your employer or customers to replace you, you’re likely making less. Intangibles are part of the value you provide, too, like how you make people around you feel, your soft skills, and your leadership attributes that raise the performance of all those around you.

8. Which game we play:
Our compensation largely depends on what game we’re playing, so to speak. For instance, the top ping pong player in the world is a Chinese man named Ma Long and he earns about $250,000 a year. Keep in mind that he’s the absolute best in the world at his chosen game and that number includes endorsements. Meanwhile, the best-paid tennis player in the world is Roger Federer, who made $9.3 million last year and a whopping additional $45 million in endorsements. They are both elite athletes that are the best at what they do, but some would argue that Ma Long is playing the wrong game. Likewise, if you’re a great salesperson who is selling shoe shines or sandwiches, you may earn a lot less money than if you transitioned into selling complex software systems to companies.

9. Our relationships:
Remember that relationships are an integral part of what you’ll earn. Networking and having friendships and familiarity with talented, successful, and wealthy people will most likely mean some of that rubs off on you or you’ll leverage those relationships somehow. Remember that it’s not what you know, but who you know! That’s why the average CEO makes $11.7 million and the average CEO of the top 200 companies in America make over $20 million. In most cases they were literally groomed for success, and without their extensive business relationships they probably wouldn’t land the top seat in the boardroom.

10. What people are willing to pay:
In a free market system, people will be compensated according to what others are willing to pay them. So if fans, consumers, and our culture as a whole, are willing to pay to see a musician in concert at $80 a ticket, then that’s what they’ll earn. If the price tag is too high or people deem that the product, service, or experience isn’t worth it, then they simply won’t pay. This is the true test of Capitalism, and the reason someone like Kim Kardashian makes ridiculous money but the average person wouldn’t tolerate paying elected politicians, even the President, higher salaries.