Companies pay higher wages to new workers and current employees ask, “What about us? “

Firms in the U.S. economy are raising wages to recruit workers in a tight labor market, with increases spilling over into businesses and prompting employers to rethink the wages of existing staff.

The so-called wage cuts – when the pay of new hires or entry-level staff approaches what long-tenured employees or senior colleagues earn – poses a financial and managerial challenge for employers, and has become a new one. urgency as companies battle to attract and retain employees amid record times. high termination rates.

When companies announce salary increases for entry-level jobs, they are also sending signals to their internal workforces, said Diane Burton, academic director of the Institute for Compensation Studies at the University’s ILR School. Cornell and professor of human resources studies. These signals can prompt companies and individuals to re-evaluate the value of skills, experience and seniority.

“The symbolic aspects of wages are important. People want to know how they are doing, ”said Dr Burton.

Chipotle Mexican Grill Inc. said in May it was increasing its pay for hourly positions to an average of $ 15 an hour, which is an average increase of about $ 2 for frontline workers. Months before making the announcement, the company completed an analysis of how the change would affect the compensation of entry-level crew members as well as other roles, from hourly kitchen and duty managers to salaried general managers who oversee the operations of a store, said Marissa Andrada, Chipotle’s Head of Diversity, Inclusion and Human Resources.