Pandemic Pay Raises & New Hire Bonuses
The tight labor market has forced employers to compete openly and aggressively for talent across the country. Companies are seeking local and remote talent to join their teams, and they’re willing to pay a premium for it.
The competitive compensation packages are highly visible in job postings- touting everything from sign-on bonuses, equity, or health insurance coverage on day one. Even employees who were not actively looking to change their jobs are scouting the market to see where they align.
For employees, this increased visibility and open competition has been a great catalyst for re-examining their own situation. However, this transparency is leaving some scratching their heads – seeing salaries and sign on bonuses that are higher than their own compensation. They’ve managed to provide superior work product under tough conditions over the last two years; yet a new hire will get a bonus before ever stepping foot in the door.
Companies know that they can’t raise salaries across the board. However, in order to be competitive, they must offer something to attract talent. Thus, sign-on bonuses have become the most common way to put cash into new hire’s pockets without needing to drastically increase the salaries of current employees. While sign-on bonuses may come with performance or tenure requirements, they are still a great way to attract new talent.
Although hiring will eventually cool down, employees have now gotten a taste of increased pay transparency. This can lead to more meaningful conversations about their own compensation or guide them into new positions. This aligns with the push for pay transparency that is happening across the country. New York City, for example, will begin enforcing a pay transparency law in May of 2022 by requiring companies to post good faith salary ranges in all published job postings.
Ideally, requiring pay ranges closes the wage gap and allows employees to understand whether they are being paid fairly. Ultimately, it gives employees the ability to make the best decisions when applying to a job or deciding to stay with a company.
Employees should be prepared to have conversations with their employers about increases in pay or performance bonuses. There should be no expectation that your employer will increase your compensation simply because they are offering similar or better compensation to new hires. Employees should take advantage the increased transparency to advocate for themselves or make the decision to find a new job.