Dive Brief:
- Pay transparency is creating a challenging environment for employers, according to Payscale’s 2025 Compensation Best Practices Report, the company’s 16th such report.
- Thanks to a heightened focus on fair pay, organizations ranked compensation as a bigger challenge than recruiting or retention. Nearly 1 in 3 of the 3,595 respondents surveyed cited unfair pay as the primary reason they lost talent, the report found.
- “We’re anticipating a ‘Year of Contention,’ as 2025 could bring a clash between employers tightening budgets and employees advocating for fair pay and better working conditions,” Payscale’s Chief People Officer Lexi Clarke said in a statement. “In this environment, listening to employees and leading with fairness isn’t just the right thing to do — it’s a competitive advantage.”
Dive Insight:
Despite a slight decrease year-over-year in companies posting pay ranges in job ads, a “strong majority” (56%) still do — and have since pay transparency legislation was enacted, Payscale said.
Nearly three-quarters of HR professionals say they want to share pay ranges at the individual level, but only about half actually do, the study found. Investment in pay equity is down 5% from 2024 but remains 19% higher than 2020 levels and a priority for 57% of organizations surveyed.
“Navigating the complexities of compensation management remains a top challenge for employers today, particularly as they strive to balance fair pay strategies with evolving employee expectations, economic uncertainty, and the rise of AI,” Ruth Thomas, pay equity strategist at Payscale, said in a statement. “Despite waning support, DEI initiatives remain a competitive advantage — equity should be seen as synonymous with merit, not separate from it.”
While the current political climate and backlash against DEI efforts are making companies more cautious, “maintaining pay equity is essential for attracting and retaining top talent,” Thomas said.
To that end, only 11% of companies said they planned to pull back on DEI investments, and 28% intended to increase their efforts.
In the past two decades, the gender pay gap in the U.S. has shrunk, but it still exists. In 1982, women earned 65% of what men made; today, they make 85% of what their male counterparts do, according to Pew Research Center.
