Compensation Trends Report 2025: Insights on Pay Disparities

The economy was top of mind for 31% of voters as they left election booths in November 2024. BambooHR’s latest compensation survey sheds light on the cost-of-living crisis employees face throughout the United States. Companies are feeling the financial squeeze, too, with 2024 being the year of cost cuts across companies and industries.

To better understand the current compensation landscape, BambooHR surveyed 1,500 full-time, salaried employees. In this report, you'll learn about:

• The current state of compensation benchmarking by industry, seniority, generation, and gender
• The relationship between compensation and employee satisfaction
• How compensation impacts turnover and retention
• Employees' expectations about pay transparency

Read on for deeper insight into the financial challenges employees are facing, and for practical strategies HR teams can use to foster a resilient and satisfied workforce.

The state of compensation and economic burdens in 2025

As 2025 begins, US workers' financial strain is palpable. Annualized inflation is lingering at 2.4%, and the average salary increase for 2024 is just a little higher at 3.6%. Translation: average salaries are barely keeping ahead of costs, influencing not just household budgets but the very wellbeing of the workforce.

Today, many employees find themselves grappling with stagnant wages and escalating debts. Over half of the workforce is burdened by financial obligations that are increasingly difficult to manage, including 60% of US workers who are paying off debt, costing them 30% of their paycheck on average. Only 41% of employees feel that their current pay is sufficient to sustain their lifestyle.

Although the economy may impact businesses' bottom line, most employees agree that employers should provide financial stability. Three-quarters of employees (76%) believe that no matter the state of the economy, compensation shouldn’t be decreased.

With 50% of employees struggling to make ends meet and 43% working more hours than ever, employees' overall wellbeing is closely tied to their pay. More than one-third of employees (36%) say there's a direct correlation between their compensation and their mental health.

HR Pro Tip

Consider implementing cost-of-living adjustments for employees in different geographic locations to ensure fairness and employee satisfaction across the board.

Average pay raises are declining year over year

Since 2022, BambooHR surveys have shown that average salary increases are shrinking—along with employee satisfaction about compensation.

For the second year in a row, 2 in 5 salaried workers haven't received a salary increase during the past 12 months. For the employees who did get a raise, the average increase was a modest 3.6%. Overall, average year-over–year pay raises have shrunk by 42% over the past two years, down from 6.2% in 2022.

This has major implications for turnover. Among active job seekers, over half (54%) are pursuing higher pay. Low pay was also a primary reason many (36%) left their previous job.

The majority of employees still prize salary over other forms of compensation: 52% say they'd rather have a higher salary than equity, bonuses, or profit sharing (down from last year’s 60%). With the cost of living so high, most employees prioritize putting money in their pockets today over other benefits, even if they might offer greater monetary value in the long term.

The majority of employees (72%) have positive feelings about their current compensation, with half of employees (50%) saying they were at least somewhat satisfied with their most recent salary increase. (A small raise is better than none, after all.)

However, the data also reveals a growing discontent. One-third (33%) of employees have negative feelings about their current financial remuneration, a sharp increase from 23% last year. Similarly, we saw a 14% drop in the number of employees who were satisfied with the amount of their last pay raise.

Construction, tech lead with highest pay increases

A closer look at salary increases by industry shows notable differences:

When it comes to salary and satisfaction, construction not only had the highest salary increases in the past year but was also the happiest industry for all of 2024, underscoring the potential impact of financial rewards on workforce morale.

HR pro tip

Monitor industry salary trends to ensure that your compensation packages are competitive enough to attract and retain top talent.

The gender pay gap worsens: Women still earn less

The gender pay gap for full-time salaried workers remains a concerning issue in 2025, and our findings indicate it’s worsening rather than improving. BambooHR’s survey found a noticeable disparity in how men and women perceive and experience salary changes.

Overall, men are more likely to receive raises, receive bigger raises, and generally feel more secure and satisfied regarding their compensation.

Half (50%) of men report that their current salary meets their lifestyle needs, in stark contrast to only 33% of women who feel the same.

The sentiment towards financial compensation also varies greatly between genders. Just 27% of men harbor negative feelings about their financial remuneration, compared to 39% of women.

This dissatisfaction among women is compounded by the fact they're less likely to receive raises. Just 55% of women received a salary increase in 2024, compared to 64% of men. Additionally, the raises women do receive are typically lower, with men receiving an average increase of 4.8% compared to women's 2.7%.

This trend isn’t new. Our historical data shows that, since 2022, men have consistently reported receiving higher salary increases than women:

Although pay raises have shrunk across the board, women's wages have been hit harder, falling 2.54% compared to men's 1.56% decrease. The ongoing disparity not only highlights the existing gender pay gap but also indicates that it’s expanding, affecting women's overall satisfaction and financial security.

Moving forward, it’s essential for companies to address the gap in compensation understanding by ensuring equitable practices that contribute to a fair and motivated workforce. Conducting a thorough audit to review salary data across all roles, broken down by gender, and ensuring criteria for salary increases, promotions, and bonuses are gender-neutral and based on objective performance metrics can help build trust and address any disparities.

Gen Z reports the highest compensation satisfaction

As employees progress through different stages of their lives and careers, their expectations and attitudes towards compensation evolve.

Gen Z is the youngest—and happiest—cohort in the workforce, with 79% expressing satisfaction with their pay. That figure stands out compared to the 70% satisfaction rate reported by Millennials, Gen X, and Boomers.

In contrast, employees tend to become less satisfied with salary increases as they age. Boomers and Gen X report higher levels of discontent at 36% and 34% respectively, compared to 32% for Millennials and only 22% for Gen Z.

This trend suggests that as employees age and their financial responsibilities presumably increase, their expectations for compensation adjustments also rise, possibly leading to greater disappointment when these expectations aren’t met.

Notably, Gen Z workers are most likely to say their financial security directly impacts their mental health. Nearly half of Gen Z (45%) and Millennials (44%) recognize the relationship between compensation and wellbeing, compared to 30% of Gen X and only 22% of Boomers.

Younger employees lead the job search

Workers' likelihood of changing jobs also varies significantly across generations. Overall, older workers tend to stay in place, while early to mid-career employees are the most likely to seek new opportunities.

Millennials are the most active job hunters, with 62% currently job hunting, followed by Gen Z (54%), Gen X (48%), and Boomers (31%).

Today's challenging job market is also shaping generational perspectives. Among Gen Z workers who aren't currently job hunting, 30% say it’s because the job market is a mess right now. By contrast, only 11% of Boomers feel the same way. For HR professionals who are forecasting workforce movement, this suggests younger workers may become more mobile once market conditions improve.

Additionally, younger workers tend to place more importance on company culture and social opportunities. Nearly half of Gen Z workers (44%) say they'd stay at a job with a positive social atmosphere, compared to just 34% of Gen X and Millennials and a mere 26% of Boomers.

HR pro tip

Establish regular compensation package reviews to ensure they remain competitive and reflect the market standards, employee contributions, and responsibilities.

Most employees think upper management is out of touch

C-suite executives generally express higher satisfaction with their compensation, with only 17% reporting dissatisfaction with recent salary increases and 56% feeling satisfied over the last 12 months. Additionally, 57% of C-suite workers believe their salary meets their lifestyle needs.

In contrast, ICs, who form the backbone of operational workforces, are often the lowest-paid and tend to express greater dissatisfaction. Specifically, 34% of ICs are dissatisfied with recent salary increases, and only 35% feel satisfied over the last 12 months. Furthermore, only 39% believe their salary meets their lifestyle needs.

Most Americans (61%) feel executive leaders are out of touch with typical employees' financial struggles. More than half of ICs (65%) feel irked by senior employees' lack of understanding of what it’s like to live on a typical wage.

US workers are correctly sensing a growing wealth gap. According to the Economic Policy Institute, CEOs were paid 281 times as much as an average worker in 2024.

With the pay gap between average workers and executives widening, it's not surprising that over half (55%) of employees think their company’s CEO is overpaid. (Though it's also worth noting that 27% of employees admit to not actually knowing what the CEO’s salary is.)

HR pro tip

Educate employees on compensation structures and help them understand how their compensation is determined, including the differences between merit-based and market-based increases, to reduce potential confusion and dissatisfaction.

Financial security and compensation bumps encourage employees to stay

As economic pressures mount, living costs rise, and pay raises shrink, many employees feel forced to seek new opportunities that promise better compensation.

In fact, the majority (77%) of employees would consider leaving their current positions for higher pay, a slight increase from 73% in both 2023 and 2022. Among these workers, it would take a 12.5% salary increase on average to sway them from their current roles (down from 13.3% in 2023 and 16.1% in 2022).

For those currently job searching, 23% are willing to accept a salary decrease if it means securing a new position that better aligns with their needs or offers other benefits. On average, employees say a 5.4% dip in pay would still be acceptable, particularly if it came with other perks or benefits.

As one employee in the construction industry explains, “As long as the compensation is close to a livable wage, people really value some flexibility and work-life balance. Companies should give more paid time off and more flexibility options to help improve happiness.”

However, many employees still feel trapped in their current roles due to the security their salary provides. Nearly half (47%) of employees admit they'd remain in a job they dislike if the pay was high, and 44% are reluctant to leave their secure salary even if they wish to change jobs.

This dissatisfaction regarding pay and work environment contributes to quiet quitting. According to our data, 51% of employees are uncommitted to their current roles and are actively looking for or considering new job opportunities.

For many US workers, it's simply too risky to quit without another job lined up. More than half of US adults (59%) are uncomfortable with their level of emergency savings and 27% have no emergency savings at all, according to Bankrate’s 2024 Annual Emergency Savings Report.

HR pro tip

Address employee concerns by actively listening to employee concerns regarding compensation to maintain morale and productivity. For example, conducting regular, anonymous surveys can help employees feel heard.

Most employees care about benefits beyond salary

While salary is the primary factor, non-salary compensation also plays a crucial role in job satisfaction. A substantial 85% of employees want additional benefits not currently offered by their employers.

Although 37% prioritize pay over other benefits, 63% would accept a pay cut for specific perks. For instance, 28% would trade a salary increase for a 4-day work week, and 26% would trade for more

In the chart below, we take a look at a number of additional benefits employees value:

HR pro tip

Enhance benefits and compensation packages—if salary increases aren’t feasible, consider enhancing the overall compensation package with benefits valued by employees, such as flexible work options or additional paid time off.

Half of employees are talking about salary transparency—regardless of policy

When it comes to salary, the desire for transparency continues to gain traction. In an environment with pay transparency, employees and managers openly share information about pay, benefits, and other critical aspects of compensation.

This openness can take various forms, such as disclosing salary ranges for every role, clearly communicating total compensation to each employee, or even revealing the exact salaries of all employees.

Workers share salary info despite restrictions

In 2025, HR professionals and managers should assume that employees are talking about their salaries and benefits with each other.

Most Boomers (77%) have never disclosed their salary to a coworker. But this taboo seems to be fading. Within the past month of our survey, 21% of Gen Z workers had disclosed their salary to a coworker, compared to only 4% of Boomers.

Overall, nearly half (47%) of employees have discussed their salary with a coworker, including 42% who compared pay at some point in 2024.

These conversations happen regardless of organizational policies. We found that 52% of employees work at companies with limited transparency, and 42% of salaried employees say their employer doesn't practice salary transparency at all.

In fact, 54% report their company actively discourages such discussions, up from 46% in 2023. This lack of openness is further highlighted by the fact that 51% of employees feel that published salary bands are insufficient for true pay transparency, and 21% don’t discuss their compensation with HR or managers at all.

HR pro tip

Promote salary transparency by fostering an environment where salary discussions are open and encouraged. This transparency helps build trust, ensure equal pay for equal work, and reduce pay discrimination.

50% of employees say pay transparency improves equality

Pay transparency is recognized as a best practice that promotes equitable compensation practices. However, it remains a sensitive issue that HR professionals must navigate conscientiously.

Employees have different definitions of salary transparency:

• 25% believe it involves clearly communicating total compensation to each employee
• 35% think it means disclosing salary ranges for every role
• 21% see it as revealing the exact salary of every role

While definitions vary, nearly half of all employees (44%) agree that salary transparency increases overall trust in the organization, and 36% say it enhances accountability for leadership.

And employees are closely tracking industry trends and staying alert for new opportunities, with 78% monitoring job listings and pay scales within their field. This vigilance is often motivated by the need to negotiate raises and promotions, as 41% track salary data for this purpose.

Resentment can also brew among employees, with 40% feeling discontent towards colleagues hired at the same time but earning more, and 31% resenting those paid more due to better economic conditions at the time of their hiring.

Half (50%) of employees believe that salary transparency ensures equal pay for equal work. Additionally, 43% see it as a means to reduce pay discrimination, and nearly 1 in 4 (23%) believe it can highlight disparities in salaries caused by market factors.

Employees’ strong sense of community and fairness extends to pay cuts, too. 38% of full-time employees would even forgo a raise to keep their coworkers safe from layoffs.

However, pay transparency can also present challenges. Over half of employees (53%) feel it can foster jealousy, and 47% believe it may lead to increased gossip and employee discourse. Additionally, 36% of employees are concerned about its potential negative impact on company culture. These issues highlight the complexity of implementing pay transparency in the workplace.

HR pro tip

Develop, implement, and communicate clear policies regarding compensation, especially if there are differentials based on location or role. This clarity can prevent misunderstandings and contribute to a more open company culture.

HR leaders need to communicate benchmarking with employees

HR leaders need to communicate about benchmarking with employees to address critical knowledge gaps and foster a fair and transparent workplace.

Nearly a quarter (24%) of American workers don’t understand the difference between merit and market increases, which can lead to confusion and dissatisfaction. Additionally, 31% of employees believe that anyone in the same role doing the same job responsibilities should be paid the same, regardless of performance.

By educating employees on the various types of compensation adjustments and the rationale behind them, HR professionals can help reduce misunderstandings, build trust, and enhance overall employee satisfaction and retention.

By implementing key strategies, companies can create a fair and transparent compensation system that not only supports employee satisfaction but also drives organizational success.

Methodology

BambooHR conducted this research using an online survey prepared by Method Research and distributed by RepData among n=1,512 adults (age 18+) in the United States who are full-time salaried employees. The sample was equally split between gender, with a spread of age groups, race groups, household income, job titles, industries, and geographies represented. Data was collected from September 13 to 24, 2024.