Increasing Pay Rates for Both New Hires and Current Employees

With the unemployment rate being extremely low, employers are finding that they must often increase the starting pay rate for new hires in order to attract individuals with the skills and experience needed for many mid-level positions. Of course, starting wages have also increased for entry level positions as the minimum hourly wage has increased and the unemployment rate has remained low. The increased pay for new hires is certainly helpful to many. However, employers must also be cautious of the impact higher starting pay for new hires has on current employees. Current employees who are doing a satisfactory or better job should not make less than a new hire with less experience except in extenuating circumstances, i.e. specific skills and extended education.

Employees often know what co-workers make. If newer employees are making more for the same job than longer term employees, morale and performance issues are likely to develop and turnover is likely to increase.

Wages will likely continue to increase for both entry level and mid-level positions. Employers need to make certain that as pay rates increase for new hires, equity and fairness is made a part of their overall compensation plans for both new hires and current employees.

Julia Aguilar