How to Deal with a Coworker Making More Money Than You

As many companies increase pay to attract talent in today’s hot job market, some workers are finding themselves left behind.

Verified professionals at Amazon have reported external hires are receiving increasingly high offers on the professional social network Blind.

A software engineer at Amazon had their total pay, which includes a base salary and stock-based compensation, increased to $180,000 after earning a promotion to “software development engineer II.” But instead of celebrating, the coder was dismayed to find someone hired in the same role, which might require as little as two or three years of experience, can earn as much as $300,000.

Companies typically set salary ranges for each position or job function to account for different experience levels, skills, job markets and performance-driven raises over time. So, how can new workers out-earn established or even long-time employees?

Why new hires make more money than older employees

Over time, workers who have been in a job may earn less than new hires in the same position, a phenomenon called wage or pay compression.

Pay compression can happen in competitive labor markets. Employers often need to increase pay to hire experienced or in-demand workers when the need for workers outstrips the supply of available talent. At the same time, raises for current staffers may not have kept up.

The disparity can also happen when companies use out-of-date data to set pay. Alternatively, inconsistent or shifting salary range schemes might also be to blame.

What to do when a coworker makes more money than you

Workers looking to earn a higher salary could benefit by searching for a new position elsewhere.

About one in two professionals (49%) said they would quit and find a new job, or switch to a different team if possible, if they found out a new graduate made more money than they did, according to a recent user-initiated poll of 2,756 verified professionals on the professional social network Blind.

New offers are driven by the current market, and employers often cannot give existing employees a raise to match, a verified Apple professional explained in response to the poll.

“But if it doesn’t happen by the next review cycle, you need to bring it up and leave if they don’t adjust because that only means a new employee is more valuable than you are,” advised the same Apple worker.

The other half of survey respondents said they would attempt to negotiate their salary with their boss.

“Most people understand when it comes to compensation,” a professional at a financial services company said, referring to managers.

Before discussing pay or attempting to negotiate a raise at work, staffers should equip themselves with what fair earnings might be. Employees should be well-prepared before their formal ask, which could also include “testing the waters” first.

The same financial services professional recommended raise-seekers to “discuss the compensation lightly and test waters” with their manager or lead. “For example: ‘Do you think we made a big impact with X feature? I’ve been thinking about asking for a raise and wanted to start compiling my achievements for my review.’”

The supervisor’s response can signal whether the raise-request may be successful.

A verified Credit Karma professional approved of the approach, adding it “doesn’t hurt to start a conversation with your manager.”

The bottom line

Companies have recently found it difficult to recruit new employees and are hiking pay to attract new talent. The result is existing workers may find themselves underpaid compared to external hires. In a competitive job market, it can pay for professionals seeking raises to find a job elsewhere instead of negotiating their salary with their current employer. According to Blind, half of the professionals surveyed said they would quit if they found out a recent graduate earned more money than they did.

Methodology

In a user-created poll on Blind, 2,756 verified professionals responded yes or no to the question “Would you negotiate salary with your boss if you found out a fresh grad makes more than you?” between Nov. 30 and Dec. 2, 2021. Respondents who answered no said they would quit for a new job or switch to a different team at the company.

Also Published on Teamblind's blog.