Employers cutting compensation spending, employees feeling dissatisfied

Employers are reducing compensation spending as employee expectations rise, leading to what researchers call a "year of contention." Many employees feel dissatisfied with their pay, with 33% reporting negative feelings about their compensation, up from 23% in 2023. Organizations are planning smaller pay increases for 2025, averaging 3.5%, down from 3.8% in 2024. Some companies are also lowering salary offers and hiring less experienced workers to adapt to a cooling labor market, where voluntary turnover rates have decreased. Despite these changes, pay transparency efforts have slightly declined, with fewer organizations publishing pay ranges in job postings. However, commitment to addressing pay equity remains strong, as many companies continue to prioritize fair compensation practices.