Why new hires often get paid more than existing employees
New employees in many companies are routinely offered higher salaries than long‑tenured staff in equivalent roles, largely because hiring budgets are more flexible than raise budgets and candidates have stronger leverage at the offer stage. Commenters argue this pattern persists because employers optimize for overall labor cost, assume existing staff are less likely to leave, and hide behind self‑imposed bureaucratic rules rather than proactively correcting pay gaps. The thread also explores strategies employees use to close the gap—such as job‑hopping, securing competing offers, or collective action—and notes the long‑term risks for companies that allow inequitable pay to erode morale and retention.
Bargaining Power & Leverage
- Many argue new hires have more credible leverage: “I’ll go elsewhere” is easier and more believable than an existing employee threatening to quit and job-hunt.
- Others counter that incumbents are actually more valuable (domain knowledge, onboarding cost), but companies exploit employee inertia, risk-aversion, and personal constraints (family, visas, liking coworkers).
Company Incentives & Pay Structures
- Companies often cap raises (e.g., 3–5%) while hiring must match current market, causing long-timers to lag.
- Several comments frame this as deliberate cost minimization: better to underpay 99 people and lose 1 than to raise everyone to market.
- Some say comp teams actively track “market” and adjust, but mostly to control employer risk, not ensure fairness.
HR, Bureaucracy & Power
- Multiple anecdotes describe HR blocking raises, rescinding offers, blacklisting leavers, or overruling managers.
- Others report HR as largely procedural, with real power at exec level. There’s disagreement about how much authority HR actually wields.
- Many view “policy” (bands, raise caps) as flexible when hiring, but rigid for existing staff.
Unions, Collective Action & Mobility
- Some advocate union-like collective bargaining to fix systemic underpayment; others insist simply switching jobs is more effective.
- Strong pushback: unions are for those without options vs. unions as coordination tools even for elite workers (actors, engineers).
- Thread notes job-hopping is lucrative but tiring and dependent on strong markets.
Counteroffers & Retention
- Opinions split: some say never accept a counteroffer (you’re now “disloyal” and will leave anyway); others report multi-year successful careers after counters.
- Common tactic: get external offers to force market-aligned pay, though this can backfire (e.g., firing, rescinded internal offers).
Internal Equity, Transparency & Alternatives
- Some companies claim to adjust existing salaries when new hires come in higher; others admit they can’t “afford” to do this broadly.
- Participants repeatedly call for salary transparency to prevent quiet underpayment.
- Negotiation advice emphasized: ask directly for raises and promotions, gather market data, clarify your value, and build a strong BATNA (alternative job options or savings).