The Negative Effects of Pay Compression:
Pay compression (also referred to as wage compression or salary compression) is when employees who have been in a job for a long time makes less than new hires in the same position.
This has been common place in the tech sector but is not immune to other sectors, esp. hospitality (where in many cases servers earn more than managers), life sciences, transportation and others.
Pay compression can lead to employee disengagement, unproductive turnover, or even lawsuits. If you have employees complaining that the only way to get a raise at your company is to quit and reapply, or to go a different company offering competitive market rates for their expertise, then you likely have a pay compression problem. You probably also have flight risks.
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Abridged: Payscale.com
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