A May 2025 Wall Street Journal article examines a cooling U.S. job market where some workers may be overpaid relative to current economic conditions. After a pandemic-era hiring boom drove salaries up, companies are now reassessing compensation as growth slows.
Data from the Bureau of Labor Statistics shows wage growth slowing to 3.1% in Q1 2025, down from 4.5% in 2023. Tech and finance sectors, which saw massive salary spikes, are particularly under scrutiny. For example, software engineers hired at $200,000 in 2022 are now seeing new hires at $150,000 for similar roles. Employers are cutting bonuses and freezing raises to adjust.
A Glassdoor analysis found that 25% of U.S. workers in high-demand fields are paid above market rates, especially those hired during 2021-2023. However, with layoffs rising up 10% year-over-year per Challenger, Gray & Christmas, some firms are hesitant to cut pay outright, fearing morale dips.
Experts suggest employees in “overpaid” roles upskill or take on broader responsibilities to justify their salaries. Meanwhile, companies are shifting toward performance-based pay to align compensation with productivity. As the job market recalibrates in 2025, both workers and employers face a new reality of balancing cost and talent retention.