I am curious if others are seeing these trend in their workplace, or hearing about it from others. My medical clinic has been offering new hires more than those currently employed with years of experience which is rubbing us the wrong way. I have seen local news articles stating that restaurants are offering more to attract servers, as well as other businesses doing the same. I know we are in unusual times, but it is making those that have given the company years of work feel undervalued. If they would give raises to show they value our work and dedication, it would be easier to swallow!
Maybe this is typical in the business world; as I came from a family business, I am not use to how the corporate world works.
My understanding is that pay compression is caused primarily by supply & demand issues.
P.S. In a major law firm setting, âsalary compressionâ does not refer to new hires; typically,it occurs when a senior associate becomes a junior partner and must now pay self-employment related taxes & benefits.
I have never heard those terms, so glad to know my company is doing what is typical. We were bought out by a company that manages multiple practices under one umbrella. This company in turn made business changes that were a win for only them; cutting managers left and right, and more work for everyone! Staff with 15+ years of service are quitting, New LPNs with little or no work experience are being paid more than a LPN clinic manager with 14 years of service with the company, same for front desk staff.
With the old company, we usually received a 3% cost of living raise. This year I asked for more and received 2%; my manager said she tried, but I did get more than most I believe I could get more elsewhere, but donât want to lose my built up PTO, current drive to work is 1 mile, like my physicians, and at my age really donât want to learn another EMR! I do look often in the event the perfect job is out there.
I think current employees should ask for a salary alignment to have them match the new employeeâs compensation. I would approach it this way, if I quit today and applied for my current job you would pay me more, so letâs just skip to the pay me more.
This highlights a severe employment crisis happening right now - millions of unfilled jobs at all levels. You canât go to any store, office, restaurant, etc. without seeing a help wanted sign.
More senior employees are usually vested in any retirement plan contributions & in incentive plans which may make staying more attractive and tolerating the similarity in pay.
When the new hires start, find out where they last worked. Then see if the places they last worked are offering higher pay to replace the employees that just left.
Unless someone is in a civil service or similar job, the argument that âif I quit youâd pay me more to come backâ rarely works. Pay equity is a big and important topic for employers, but itâs a macro issue (i.e. over time, do we pay our non-white employees less for doing the same work as white employees), not a onesie twosie âJoanne is making more than Susie so letâs give
Susie a raiseâ.
BUT- impact and value to the organization- these are compelling arguments which often result in a pay equalization bump. Itâs all about the discussion and the tone.
Likely successful: âIâve been here for ten years, and in the last two years, Iâve taken on the work of three employees who have quit without having been replaced, successfully trained two new team members on our system, and have become the troubleshooter for the department whenever we have a problem we are reluctant to escalate. Iâd love to partner with you to find a way to increase my compensation over the next 18 months to reflect my contributionsâ.
Likely unsuccessful: " Bob just started and heâs making more than I am. That is really, really upsetting because if I quit, people would be up in arms and thereâd be a stampede for the door. So Iâd like to see my pay increased to a little more than Bobâs starting my next paycheck."
Good luck. Itâs aggravating but eminently solvable if you are rational and lay out the business case for a raise!
I see it all the time. Most people wouldnât move unless they are getting a bump to their salaries. Iâve had employees who were paid way below their new peers, when I raised it with HR I was told to have them get another offer and they would match it. Iâve said it was stupid because once they get another offer most likely they would follow through with it.
What happens during a hot market is everyone just moves from one job to another in order to get a raise. Itâs like everyone just shifts one chair over.
Very common scenario, has been happening for years in the tech world. Which is why we see so much of the job-hopping after a couple of years. Even worse with employees in certain other countries (like India, Mexico etc) - there, employees get almost twice their salary if they jump jobs.
They raised minimum wage to $15 here, so new employees make $15 and old employees make $15. The old employees got a raise to $15 (had been making about $12), but they often have much more responsibility than the new employees.
My daughter works at Starbucks in another state (minimum wage is still federal minimum wage of $7.25). She is a shift leader and is supposed to make about $1/hr more than others. They all just got a raise to about $12 and she didnât get that raise so now makes what they do, but has to open or close, has to train all the new hires, deal with problems.
I will say Starbucks has been good to employees, paying when theyâve shut down for covid (several times) or when she tested positive for covid, but it is time to pay them more, even in lower income states.
Iâd inquire at other companies if they have openings and see what the salary difference would be. Be sure to factor in other benefits like retirement or health insurance, etc, because sometimes it looks like someone has a higher salary, but if itâs all added up it might not be.
Then youâd have options to go ahead and switch or see if your current employer would match what you would be getting. The worst that happens is they say no and you decide to stay anyway for the lack of commute or whatever, but at least youâd know instead of wondering âwhat if.â
I agree with @oldfort. In many cases, folks just change jobs and that is how they get better salaries and benefits. Once someone has made the decision to look elsewhere, there is very little a current employer can do to keep them. Simply putâŠitâs too late.
It used to be that whoever started looking for a new job would get cold shoulder from the employer upon pay raise requests (and maybe even the boot!). May not be the case now⊠I know a few folks who leveraged a nice pay bump when they disclosed that they were looking to their employers. It depend on how in demand the skills are and how critical the position really is.
Itâs not those who are looking. But where I am, when someone gives notice they are resigningâŠmore often than not, the current company will try to entice them to stayâŠespecially if the employee was good, and they donât want to lose them.
Employment at will means one can accept an offer, hand in a resignation, but then change their mind when the current employer counters with a pay bump, and then tell the new employer âsorry, I am not coming.â May not be completely ethical but fully legal. Of course, when the times get tough, the first folks that get the boot are those who were not very loyal.
Iâve been a nurse at the same hospital for over 30 years, I donât remember the last time I got a salary adjustment because Iâm âmaxed outâ. It hurts us loyal staff to hear of new nurses being enticed with huge sign on bonuses only to have them leave when the time is up. Itâs time to pay retention bonuses. The cost of turnover for one nurse is over $70,000 due to training and lost productivity.
I believe I could get more elsewhere, but donât want to lose my built up PTO, current drive to work is 1 mile, like my physicians, and at my age really donât want to learn another EMR! I do look often in the event the perfect job is out there.