The New Hire Starts Higher Than the Five-Year Veteran

There's a thing in tech jobs that surprises nobody: the new hire in the same role starts on a higher salary than the person who's been there for years. HR calls it salary compression.

I've been in one place for a fair while myself. Chewing on this over the last couple of evenings, I got stuck on a very simple question: when was the last time someone outside the company put a price on my number?

I counted on my fingers. Couldn't come up with a year.

First, where compression comes from.

A company raises existing staff's pay roughly once a year: take last year's number, multiply by a percentage. That percentage depends on the company's budget that year. It isn't directly tied to what the market is doing.

A new hire's price runs on a different track. When you're hiring, the candidate may be holding offers from elsewhere, and if you lowball them they simply don't come. So a new hire's price is quoted by the market, on the spot.

Most years the two tracks stay close. In years when the market heats up fast, the company is forced to raise what it pays new people, while it can take its time with the old ones — raising newcomers is a must, raising veterans can wait. That's how compression builds up year after year. Nobody has to be acting in bad faith.

So for the people who stay, the salary they hold is really "the last market quote, plus some years of internal adjustments." The longer you stay, the staler the first half gets.

At this point the obvious conclusion is: go job-hop. That's what I thought too, until I dug into some data.

The Federal Reserve Bank of Atlanta runs a Wage Growth Tracker. It follows the same people's hourly wages a year apart and splits them by whether they changed jobs that year. It's the only dataset I could find that's published monthly and broken down this finely, so these are US numbers; for China, take only the direction.

I lined up the three-month moving averages of the two groups, month by month:

July 2022: people who switched jobs saw hourly wages up 8.6% year over year; people who stayed, 6.0%. A gap of 2.6 points. That was when the US was most short of workers.

February to July 2025: six months in a row, it flipped. Take June: switchers up 3.9%, stayers up 4.2%. Job-hoppers actually got less. NISA's chief economist counted that in the tracker's 341-month history, it has been inverted like this in only 36 months.

By September this year it had opened up again: 4.7% versus 3.4%.

Those extra points for switching really measure how short the market is of people. When it's short, the people changing jobs hold the cards. When it isn't, some of the people changing jobs are looking for the next thing after a layoff, negotiating from a weak spot, and breaking even counts as doing fine.

The price the market puts on you could be higher than the company's internal table. It could also be lower.

Which brings me back to the question I couldn't answer on my fingers.

Getting smaller raises is a loss you can see. A few points less each year, and you know it. Not knowing what you're worth right now is the loss you can't see.

What makes it expensive is that you make decisions on a number nobody has checked. Taking on a thirty-year mortgage, the silent assumption is "this income would hold up somewhere else too." Turning down an opportunity, the cushion underneath is "I could walk out and easily get more." Nobody has verified either sentence for you.

Which way the price leans doesn't matter much. What matters is knowing how far it leans.

Compare it with a home. Live somewhere five years and you roughly know what flats in the complex are listed for lately; agents call every so often to tell you. Nobody calls about your salary. It can go years without anyone quoting a price on it, and you live by it every single day.

What I'm doing this week is small: pick an evening, search local openings on a job site using my real stack and years of experience, write down three salary ranges with the date in my phone notes. No résumé, no chatting with HR. Just look at the price.