We all know about the pay gaps that can arise within any company, whether that is between men and women, older and younger employees, or able-bodied and disabled employees. Many steps have been taken to narrow the pay gap in recent years; however, the Great Resignation that took place between April 2021 and April 2022 may have set this back in some way.

If you were one of the many employees who resigned from your job during this time, you may already have an idea of why the Great Resignation started. In order to retain existing employees or attract new ones, higher counteroffers and starting pay are increasingly being offered by companies. This can cause a pay inequity between new employees as well as those who have been made a counteroffer and employees who have stayed throughout.

In this article, we share with you more about the pay gap caused by the Great Resignation and what can be done about it.

What Is the Great Resignation?

The Great Resignation is the mass resignation from jobs that began as a result of the COVID-19 pandemic. Did you know that in November 2021 alone, there were more than 4.5 million employees who quit their jobs? This is the highest recorded figure in a month since the government started keeping track of statistics in 2000! This has created a massive talent gap in the market, with companies willing to pay more to attract or retain qualified employees.

When an employee hands in their resignation letter, companies may try to retain them by offering a higher pay than what they have been receiving. They may also try to attract new employees by advertising a higher starting pay than they used to offer.

While this may work in the short term, it gives rise to another issue of pay equity: Employees who have been with the company since before COVID-19 and who did not hand in their resignation letter may find themselves on the short end of the stick. Companies now have to come up with a way to appease both groups of employees or risk losing more talent down the line.

The Impact of the Great Resignation

As a result of the talent crunch that resulted from the Great Resignation, employees are now seeing a much higher jump in salaries and bonuses. As many of us know, in today’s workplace culture, it is no longer taboo to discuss salaries. Existing employees will soon find out that their new coworkers are earning much more than they are when they first started out, or that their coworkers who had handed in a resignation letter now find themselves benefiting from a pay raise.

It goes without saying that this group of employees will soon find themselves disgruntled. In order to retain them, management will have to decide how much more to pay them to bridge the gap. While this may sound fair in practice, it causes another problem. When any employee’s pay is reconsidered on an individual basis without taking into account how their coworkers are treated, this can result in inequity, which is what caused the problem in the first place.

Although companies may have regulations around the starting pay to offer a new employee, many do not have guidelines around making counteroffers. As an increasing number of employees threaten to quit, their individual managers may start putting higher counteroffers on the table, resulting in a wider pay inequity between them and their coworkers.

This Pay Gap Is Taking a Backseat

Although many companies acknowledge that this pay gap is a problem, the current situation means that it is taking a backseat to more critical issues on the table. In order to mitigate the talent crunch, companies are taking steps to hire new talent or retain their existing employees through monetary incentives. They acknowledge that this pay gap is an issue, but one that they will deal with in the future. However, the problem with this is that there’s no guarantee it will work out as planned.

How Companies Can Attract and Retain Talent

Here comes the million-dollar question: How can companies attract and retain talent without perpetuating the pay gap and creating issues that will need to be resolved down the line?

Below are some best practices that may help:

  • Reward Existing Employees with One-Time Bonuses

Instead of making a counteroffer for each employee who threatens to quit, consider rewarding them with a one-time bonus instead. This is not to say that their pay should not be increased. However, it should be done so with an evaluation of many other factors in mind, such as company guidelines and the pay of their coworkers.

  • Review Salaries More Often

It is the practice in many companies to review salaries once a year. In order to remain competitive now, companies may want to consider doing this more often. Besides the employees who have expressed their intention to quit, this should also cover all existing employees. This will ensure that everyone gets a fair chance to have their pay reviewed instead of subjective counteroffers being made just to retain an employee.

  • Reassess Current Practices


Every company has its own practices regarding pay raises and promotions. While this may have worked for your business previously, it may no longer be the most effective in light of the Great Resignation. Leaders and members of senior management should get together and discuss how current practices can be changed to better support the growing needs of their business.

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