salary compression

Definition

When there's little difference between the pay of new hires and experienced employees, or between different job levels. The phenomenon that makes loyal employees realize they should have job-hopped years ago.

Example Usage

Due to salary compression, the new graduate makes only $5k less than me after my five years here—time to update my resume.

Origin

Identified as a compensation problem in the 1970s-1980s during periods of wage inflation

Fun Fact

Salary compression is a leading cause of experienced employee turnover, as companies often pay more to attract new talent than to retain existing staff.

Source: Compensation management and pay equity terminology

Related Terms

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exploitation

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requisition

The formal request to hire for an open position, requiring approval from multiple levels of management. The bureaucratic hurdle between 'we need someone' and actually posting a job.

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talent density

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