Wage compression is defined as which description?

Wage compression is defined as which description?

• A. Wage growth accelerates with years of service
• B. Wage growth early in career that tapers off near the top of the salary scale
• C. Wage stagnation across the board
• D. Salary increases only with promotions

Answer: (B)

Wage compression happens when the gaps in pay between workers with different levels of experience become smaller. The best description here is that wages grow quickly early in a career and then slow down as you reach the top of the salary scale. This pattern means new hires can catch up to more senior staff because raises are large at the start but taper off later, reducing the overall spread in pay across the workforce. It often results from standardized pay scales, market adjustments that lift starting salaries, or limited room for increases at higher levels. The other descriptions describe different patterns—gaps widening with tenure, no wage growth, or increases occurring only with promotions—which don’t reflect the tapering, narrowing effect that characterizes compression.

Wage compression happens when the gaps in pay between workers with different levels of experience become smaller. The best description here is that wages grow quickly early in a career and then slow down as you reach the top of the salary scale. This pattern means new hires can catch up to more senior staff because raises are large at the start but taper off later, reducing the overall spread in pay across the workforce. It often results from standardized pay scales, market adjustments that lift starting salaries, or limited room for increases at higher levels. The other descriptions describe different patterns—gaps widening with tenure, no wage growth, or increases occurring only with promotions—which don’t reflect the tapering, narrowing effect that characterizes compression.