For sure, pay is much more driven by immediate staffing needs for retention or hiring. This has more to do with the labor markets and work pipeline than anything about an individual employee.
But people say they should be paid based on ability, performance, and experience. So this is what the conversation will be centered around, whether it is the complete reality for the considerations made by the employer or not.
Alice won’t care that Bob was hired for $10K more because there was a labor shortage and the company was going to lose a contract if they couldn’t hire another person. She just wants her $10K. So, the marginal cost of hiring an additional employee is not only the cost of that employee, but the additional wage demand that would result from the rest of your workforce. This is likely why we see many companies giving bonuses in this labor crunch rather than higher base wages.
But people say they should be paid based on ability, performance, and experience. So this is what the conversation will be centered around, whether it is the complete reality for the considerations made by the employer or not.
Alice won’t care that Bob was hired for $10K more because there was a labor shortage and the company was going to lose a contract if they couldn’t hire another person. She just wants her $10K. So, the marginal cost of hiring an additional employee is not only the cost of that employee, but the additional wage demand that would result from the rest of your workforce. This is likely why we see many companies giving bonuses in this labor crunch rather than higher base wages.