Ambassadors work for the Department of State, making them federal employees and subject to public pay schedules. Public pay schedules aim to remove biases by rewarding equally qualified people for equal types of work, as defined through schedules and charts. Along with a salary, ambassadors receive generous benefits and extra pay for difficult posts.
Ambassadors represent the interests of the United States in countries where the United States maintains an embassy. Ambassadors lead the diplomatic mission in the country to which they are appointed. The President appoints ambassadors, with roughly one third coming from the President's personal supporters and two thirds from the ranks of the State Department's senior foreign service.
The Foreign Service pay schedule is divided into nine classes with 14 steps each. Foreign service pay is 8 per cent above civil service---employees that work in the United States---pay. Ambassadors are senior foreign service members that in 2011 made a minimum of £77,710 and a maximum of £116,805 depending on experience and education, or roughly class one, step four and up.
In addition to salary, ambassadors may receive more if they work in an expensive, dangerous or difficult place. Locality pay is expressed as a percentage increase in an ambassador's base salary. An ambassador serving in a European capital may get a cost of living increase to cover high expenses, while an ambassador living in a capital city with a high crime rate gets a risk increase and an ambassador living in a place with high pollution, spotty electricity or few paved roads may get a hardship increase.
As public employees working overseas, ambassadors also receive generous benefits. The State Department maintains special residences for ambassadors which they live in rent-free. The State Department also pays for language classes and other training, for ambassadors and their family's moving costs and subsidises insurance.