Companies Ignore Wage Compression and Don’t Understand Why Good Employees Jump Ship

Employees harbor no regard for company loyalty. They’ll stay in a position for a few years, build their skills, then jump ship the second they receive a better offer. 

Companies decry workers’ newfound freedom while refusing to see that they’re the problem. 

Employees Leave Over Wage Compression

Employees don’t leave because they want to. Very few people relish in the tedious prospect of job hunting. They do it because their current position leaves them no choice. 

The phenomenon known as wage compression keeps employees job hopping. Employers could fix it if they wanted to. They’d rather gamble and hope their good workers don’t realize how much wages have changed since they’ve been hired. 

What’s Wage Compression?

Wage compression happens when inflation changes the market rate for certain positions. Recruiters can no longer hire talent at their old wages and must offer new employees higher salaries. 

However, the new wages don’t apply to current employees.

People who dedicated their time and energy to the company for the past few years don’t see any pay increases as they watch new hires (often younger and inexperienced) command much higher wages. 

As a result, the new folks have fatter paychecks than the experienced folks, who are often asked to train their higher-earning counterparts. 

Taboo Salary Talks

Companies know they’re doing it. It’s one of the reasons they try to keep salary talks taboo. If the experienced workers never realize they’re getting shafted, they won’t think to quit. 

Typically, this insidious practice blows up in the company’s face when their best workers discover the truth about their pay. 

Companies Refuse Raises

Many employees like their current positions and want to stay. Upon discovering the pay disparities, they approach their managers, asking for equal compensation. 

All too often, the manager refuses, citing differing budgets for retention and recruitment. 

The Best Way to Make Good Employees Quit

Good employees don’t take it standing up.  As soon as they realize that their skills can demand higher salaries and their companies refuse to pay them what their worth, they start job hunting. 

They stop going above and beyond for the company and refuse to take on the work of extra people. 

They’re on their way out. And sometimes they’ll become so upset that they’ll quit without notice, leaving managers holding the bag (and doing all their work.)

A Problem Easily Avoided

Companies cause their own problems with wage compression. Their short-sightedness in mistreating employees can decimate their business. 

While the company flounders, the managers feign ignorance. They ask, “Why doesn’t anyone want to work anymore?” refusing to admit that their awful labor practices are the true culprit.

Companies need to adjust wages as the market adjusts to retain top talent. They should stop expecting employees to keep giving everything to the company for paltry wages that barely paid enough to survive ten years ago, especially as they’re happy to pay new hires more. 

Benefits Would Help

Employees care about more than salaries. Companies can offer a wide range of benefits that would improve loyalty, even if they can’t compete on salary. 

Work-from-home opportunities, flexible schedules, more time off, and other options would improve employees’ work-life balance, and many would gladly take a slightly reduced salary if it meant increased flexibility. They’d also stay for benefits like health care, more time off, and a retirement savings plan.  

Better Leadership

The final factor that makes employees jump ship is poor leadership. The adage that employees don’t leave companies; they leave managers is more true now than ever. 

Companies would be wise to conduct leadership training and promote a culture of inclusion and respect rather than a toxic work environment where the boss rules with an iron fist. 

Companies Can Change

The bottom line is that despite big business’s arguments to the contrary, their “profits above all” posture remains the problem. 

Companies have the power to fix our toxic work culture by offering higher wages, better benefits, and a healthy work environment. 

The question is will they get the message before they lose all their employees?