Compensation is a trainwreck right now.

Maybe it always is?

Compensation is a trainwreck right now. Let’s review the last few years:

👉Post-financial crisis until 2020.

A decade of good times where people got accustomed to salaries inching higher every year. Companies just baked it into the cost of doing business.

👉The COVID crash.

People either:

1. Realized how quickly their livelihood could disappear and learned to hustle, or
2. Thanked their lucky stars they hung on.

For companies, it was the first chance in years to cut costs and gain negotiating power with new hires.

👉The 2021-2022 hiring boom aka the Great Resignation (still hate that moniker).

• Salaries skyrocketed.
• Remote work flourished.
• Companies paid whatever it took to hire.
• Worker shortages and rising costs drove more offshore hiring.

👉The 2023-2024 Free-Money-Is-Over Era

Workers fell into two groups:

1. “I made it through layoffs and I’m never leaving this high salary I got.”
2. “I got let go and I’ll take anything I can get.”

(Side note: Group 1 = today’s real estate market. Anyone who got a ~3% mortgage rate isn’t moving.)

Meanwhile, companies cut costs and headcount.

Where does that leave us now?

👉 Two worker groups: those who need a ton of money to move, and those who don’t.

👉 Companies miss the nuance. They talk to the latter group or look at aggregate salary data (which combines them) and don’t understand why ‘market’ rates don’t entice happily employed people.

👉 The real ‘disruptor’ isn’t AI or H1B visas as the media would like you to believe. It’s offshoring to Latin America, Eastern Europe, and India. Companies are more comfortable with it now. And those workers are really good, too.

In short:

• Companies will onshore positions that are strategic or require a local presence. Then offshore whatever they can and/or leverage that against comp for US hires.
• US workers are going to move to higher skill or more strategic roles. Or suffer from wage stagnation.

Just my opinion. Don’t shoot the messenger.

James Hornick

Partner at Hirewell. #3 Ranked Sarcastic Commenter on LinkedIn.