I am experiencing wage compression.

13 Comments

1. AnonymousFebruary 28,2024 at 3:08AM UTC

   Has there been a recent change in leadership? If so, they are trying to move out the legacy players. Also, they may be paying more, but they are likely hiring two for every three that leave. Another possibility is it is RIF without laying anyone off. Be prepared for cutbacks to start happening if people don't leave fast enough. It's likely a cost-cutting measure since they reduce the workforce by a quarter or a third.

2. AnonymousFebruary 28,2024 at 6:46AM UTC

   It's pretty common and I learned back in my 20s that I needed to be a job hopper every 3 or 4 years to keep my salary high and my career on track. I'm now 66 and can tell you it worked.

   But the flip side is is that you can never get too comfortable and rest on your laurels. You can never enjoy what you've built and marvel for a time at how well things run.

   You are jumping to the next company, building on what you know. Reaching and stretching. And making more $

   So if you like to get comfortable, like building relationships at work, like to be loyal to a company then I saw early that that comes at a price in reduced income, less on your bonus, less profit sharing and less perceived value.

   I knew the kind of career I wanted, what made me happy and I knew money was my measure. Did I see the inequities, the unfairness? Sure but I didn't stick around for much of that.

   So all of this is to say, no company is going care for you, know your value and understand your success like you will. Do you deserve to be paid at the top end of your role? Are you as valuable (or more) as the new hires....I say yes. But the company does not know that. They just know they can and will pay you less. Because they can.

3. AnonymousFebruary 28,2024 at 1:24PM UTC

   Former Compensation analyst here.. pay rates can be complicated. You were paid what you were paid when you were hired. Budget, market rates, experience and leadership play a big role. While it does not positively contribute to the experience of tenured employees-paying new employees more is not illegal or unethical. Within the time current employees have been in their position- have they performed to the level of increased wages or even asked? I have been on both sides of this scenario and personally chose to avoid comparison.

   Also, asking for a raise based on someone else’s pay may not be received well my the leadership.

4. Julie EMarch 4,2024 at 5:20PM UTC

   Hiring new employees more may not be illegal but it is definitely unethical. How is a new employee worth more than someone who’s been doing the job for years? The first month or more they will be in training to learn to do what their lower paid counterparts have already mastered. Explain to us how this is ethical.

5. AnonymousMarch 5,2024 at 1:02PM UTC

   Ethics refers to the moral and principles that governs a persons behavior. You assume that experience equates proficiency. If they have been doing the job, why haven't they been promoted? Tenure does not guarantee results. A lot of people are in positions for a long time and never develop past the level of a new employee. Now, I do not personally think it is best for employee morale (which is different than morals, hence ethics) but it creates competition in the environment. Being there is not good enough anymore.. I also addressed budgets, leadership and market valuation. These factors change. You mentioned that their lower paid counterparts have "mastered" things. Why should increase be given to someone that has mastered something? There is no more room for growth at this point. My perspective is to shed light on other factors for consideration since I have been in all positions (new employee paid more/experienced employee paid less/experienced employee paid more). My explanation of my previous statement being ethical has concluded

6. AnonymousFebruary 29,2024 at 2:07PM UTC

   I disagree with the comment that paying current employees less than new employees for the same work is not unethical. While not illegal, it is unethical, especially since these companies are banking on current employees being too comfortable to look around.

   The most you can do is look around and get yourself that pay raise somewhere else. And don't train any new hires. Let the company reap what it sows in the loss of institutional knowledge.

7. AnonymousFebruary 29,2024 at 2:22PM UTC

   This is very common - HR normally only will adjust to market rate for new hires coming in - they have to, otherwise people will just decline the offers. But getting them to do a market rate adjustment for current employees seldom happens. If you're in an environment like this, honestly the best way to get an adjustment is to come in with an offer for more from another employer and ask them to counteroffer.

8. GirlBossanova934974February 29,2024 at 2:28PM UTC

   Strictly going off what you are saying here, the company has made a business decision.
   The company wants to reduce its workforce size and not get hit for big severance amounts and higher state unemployment taxes down the road. So out of 10 people who leave, they will replace 6-7. So if the average wages/hour paid for the replacements are 15% higher than the current employees, the company still makes money. And no money for severance. No extra dollars for state unemployment taxes down the road. No chances for negative PR. If I were you, I would be leaving.......

9. AnonymousFebruary 29,2024 at 5:55PM UTC

   This is fairly typical especially with a larger entity as internal salary compression means that the current employees make less than what the market is offering. Money aside if the role and the culture is satisfying to you perhaps looking internally for upward roles is a solution to consider? If not then the only option if the company cannot remediate this problem is to look elsewhere. Its unfortunate but doing the shift in one department affects the company in its entirety so its harder to move the course of a cruise ship than it is a rowboat. Smaller companies are much more nimble on making it right if they are still building their salary bands.

   If your company is not making up for cost of living increases aside from merit increases your comp is less each time the year rolls over no matter where you are.

10. AnonymousMarch 1,2024 at 1:31AM UTC

    Happening in healthcare especially for nurses.

11. AnonymousMarch 2,2024 at 2:16PM UTC

    Happening to me now in manufacturing in the Midwest

    For me a seasoned worker aged 60 in 4 months it is even harder to find employment to support myself in my single income household

12. AnonymousMarch 2,2024 at 5:17PM UTC

    It is very common and I have worked in a variety of industries. I have seen employers respond in different ways- sometimes management seems surprised at how low a current employees salary is and takes quick action to correct. Some are completely unphased and say “this is how the market is”. I think some orgs get in the situation of paying current employees less because they do not give salary increases outside of a standard merit process. If your skill set has advanced and/or responsibilities increased, that should warrant a comp review and appropriate adjustment.

13. AnonymousMarch 3,2024 at 2:15PM UTC

    Common. I am applying for a similar position with a different employer that is $5.00 more an hour!

    In early 2022 my current employer tried to keep up by raising everyone’s wage but clearly that was not effective: