Negotiation
Pay compression, and the colleague you trained who earns more
New hires are priced against today's market while existing staff are priced against last year's salary.
Most explanations of pay compression stop at the point where it starts to matter. This one carries on.
The short version
- Internal increases are usually percentage-based while new hires are market-based.
- Compression is a predictable arithmetic outcome, not favouritism.
- It is one of the strongest evidence-based cases for an internal adjustment.
Two different pricing methods
Existing salaries move by percentage increases applied to what you already earn, which is a function of your history. New salaries are set by what the employer must pay today to attract someone, which is a function of the market.
When market rates rise faster than internal increases, the two diverge and new joiners overtake experienced staff. This is arithmetic rather than a judgement about anyone's value.
Why employers let it happen
Correcting compression means raising many existing salaries at once, which is expensive and permanent, while hiring at market rate is an unavoidable cost of filling a role. Finance functions frequently choose the cheaper option and absorb the resulting turnover.
Put simply, it is a short-term decision with predictable long-term costs, and organisations make it repeatedly. Naming the mechanism removes the personal sting, which is worth something on its own.
It is a strong case to make
A documented gap between what the employer is currently advertising for your role and what you are paid is unusually concrete evidence. It is difficult to argue against, because it is the employer's own published figure. The request is a market adjustment rather than a performance rise, which is a different and often separately funded mechanism.
On an ordinary week, asking specifically for a market adjustment, using that term, points at the right budget.
Collective action moves it faster
Compression usually affects a group rather than an individual, which makes it well suited to being raised collectively. Where a union or staff forum exists, a group case for re-benchmarking a role is harder to defer than several individual conversations. Employers sometimes conduct a formal review when the pattern becomes visible, precisely to avoid piecemeal exceptions.
In practice, that review is the outcome worth pushing for.
Discussing pay with colleagues
Many people believe they are forbidden from discussing pay, and in several jurisdictions clauses attempting to prevent it are unenforceable or unlawful. The position varies by country, so check with your labour authority or union before relying on either assumption. Secrecy about pay is what allows compression and other disparities to persist unmeasured.
Put simply, where discussion is lawful, it is the only practical way most people discover a gap exists.
If that does not fit your week, it is not a failure of willpower.
When the answer is to leave
If an employer will not correct a documented gap, the market that produced the gap is available to you as well. That is an uncomfortable conclusion and often the accurate one. It is also why compression reliably produces turnover among exactly the experienced staff an employer least wants to lose.
Deciding calmly, with the figures written down, produces a better outcome than deciding in frustration.
The takeaway
Compare your pay with your employer's current advertisements for your role. That is the strongest evidence there is.
The version you keep doing is the version that works.
Questions readers ask
Am I allowed to discuss my pay with colleagues?
In several jurisdictions clauses preventing it are unenforceable or unlawful, but the position varies. Check with your labour authority or union.
What should I ask for if new hires earn more?
A market adjustment rather than a performance rise, using the employer's own current job advertisements as evidence. It is often a separately funded mechanism.
