Bosses are subtly attempting to adjust employee compensation, declaring that the time of overcompensating for talent has concluded. Salaries for many white-collar recruits diminished last year, and currently, wages for new hires in sectors like construction, manufacturing, and food processing also seem to be declining, according to data from ZipRecruiter.com. Job seekers have observed that positions that previously offered between $175,000 to $200,000 annually are now listed at significantly lower amounts, prompting them to reconsider their salary expectations. Additionally, companies are relocating job openings to more affordable cities or converting them into lower-paying contractor roles, according to recruiters and corporate advisors.
This effort to reset salaries indicates a shift in power within a cooling job market, with employers having more say over hiring and compensation levels. Employers are increasingly questioning the need for top-tier hires when less expensive workers suffice. Even hourly jobs, which were recently challenging to fill, are now advertised at reduced salaries, as are some professional roles, according to industry leaders and recruiters. Eric Joondeph, a 31-year-old job seeker, noted, "A lot of companies think they can get away with offering lower salaries because they know we job seekers are desperate." He has adjusted his pay expectations downward by over $20,000 annually since his job search began. Among over 20,000 job titles listed on ZipRecruiter.com this year, sectors such as retail, agriculture, transportation, warehousing, manufacturing, and food experienced declines in average posted pay, with retail seeing the largest drop at 55.9%, followed by agriculture at 24.5% and manufacturing at 17.3%. Tom Locke, a McDonald’s franchisee operating 56 restaurants in Ohio, Pennsylvania, and West Virginia, reported starting hourly workers at $13 per hour, but he has eliminated signing bonuses and other incentives from the pandemic era. Locke is continually evaluating whether he can reduce hourly wages to $12 per hour, citing increasing labor cost pressures that now exceed his food costs for the first time in his 24-year tenure with the company. "I want everyone to succeed in America, but there are cost pressures," Locke stated. "It’s a constant battle."
In white-collar sectors, pay adjustments persist. Joondeph, searching for a senior customer experience position since losing his job, remarked, "I’ve noticed salaries gradually decreasing for roles I’ve been targeting." Based in Boise, Idaho, he observed numerous roles now advertised at salaries just over $60,000, which were previously listed in the $80,000 to $100,000 range six to nine months ago. Some companies aim to attract less experienced yet coachable individuals who command lower pay than seasoned professionals, according to corporate advisors. Brooke Weddle, a McKinsey & Co. senior partner, described a client's decision to forego recruiting top performers to reduce costs, referring to it as a "no more unicorns" hiring policy. Other firms are contemplating relocating jobs overseas for cost efficiencies, such as hiring data analysts in Mexico or economic European regions like Poland rather than the U.S., illustrating what Weddle calls "geographic arbitrage." In the U.S., some Fortune 1000 firms are shifting enterprise software roles from high-cost cities like Chicago and San Francisco to lower-cost locations such as Cincinnati and St. Louis, according to Keith Sims, president of Integrity Resource Management. Sims, with 25 years of recruiting experience in software systems like SAP and Oracle, hasn't witnessed such a deliberate effort to curtail pay since the 2009 recession. Tech job salaries, formerly in the $110,000 to $130,000 range, are now offered to less experienced candidates for $85,000 to $100,000. Some companies have laid off entire departments, reconstituting them with new hires at reduced compensation levels.
While average pay for new hires in white-collar fields rose this year after a decline in 2023, supported by gains in areas like law, engineering, and healthcare, certain tech roles involving artificial intelligence still offer substantial pay, but many others advertise lower salaries than two years ago, according to Silicon Valley recruiters. Jill Hernstat, CEO of the tech recruiting firm Hernstat & Co., noted that "most candidates are seeing lower salaries." Hiring managers are aware of their stronger negotiating position. Other white-collar fields witnessing reduced starting salaries include finance, down 9.2% over the last year, followed by other professional services at 2.4%, and insurance at 1.6%, as reported by Gusto, a firm specializing in payroll and benefits solutions for over 300,000 small and midsize businesses.
These salary adjustments are alleviating some internal tensions among employees who previously resented higher pay for newcomers while their own salaries lagged behind, according to Tom McMullen, a senior client partner at Korn Ferry, a global organizational consulting firm. "Numerous leaders wanted the market to cool, as they created internal equity issues by excessively paying for scarce talent," McMullen said. "Leaders