Pay inequality turns tenured employees off—and out the door

Employee retention is a hot topic these days, and we’re here to address yet another issue adding to employers’ struggle: pay inequality.

Rising inflation and an increasingly competitive market mean many employers are boosting new hire starting salaries—much to the dismay of some employees. In a recent survey by Capterra, 68% of hiring managers report having at least one employee ask for a raise or threaten to leave over a pay discrepancy in the last year.

The survey gives insight into what can become a costly hiring cycle: higher starting wages have current employees looking elsewhere for a pay raise of their own, leaving companies scrambling to find (and afford) more new hires.

According to Brian Westfall, principal HR analyst at Capterra, “Companies have to increase new hire pay, as inflation and labor shortages are forcing their hand. But organizations need to be prepared if and when tenured employees understandably raise a stink over pay discrepancies.”

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