Payscale, the leading provider of compensation data, software and services, released its flagship report, the 2025Best Practices Report (CBPR). Payscale’s sixteenth comprehensive annual report reveals the latesand compensation trends, analyzing data and insights from industry professionals and HR leaders amidst DEI backlash, labor tensions, and broadening pay transparency legislation.
“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,” said Payscale’s Chief People Officer,“In this environment, listening to employees and leading with fairness isn’t just the right thing to do—it’s a competitive advantage. A cooling labor market, rising pay transparency and the potential for an economic rebound could reignite the battle for top talent. Companies that invest in compensation strategy and prioritize equitable
Key takeaways from the 2025 CBPR include:
Labor Tensions, Pay Increases and Remote Work: Employers are balancing cost controls with the demands of a competitive labor market where pay transparency and retention are key.
- Organizations in 2025 plan to give a 3.5% pay increase in base salary, down slightly from last year’s 3.8%, with smaller organizations leading with higher raises.
- Driven by an increased focus on fair pay, compensation remains the most challenging HR activity for organizations, exceeding recruiting and retention in both 2024 (50%) and 2025 (44%), despite having dropped a few percentage points.
- A significant 31% of organizations identify unfair pay as the primary reason for losing talent, highlighting the damaging impact of pay inequity.
DEI and Pay Equity: Despite backlash against DEI and recent executive orders creating uncertainty, employers who took Payscale’s survey in late 2024 overwhelmingly showed support for DEI initiatives, especially pay equity, which is essential to talent acquisition and retention.
Overall, more organizations are in favor of DEI than not. Only 11% said they planned to pull back on DEI, while 28% planned to increase investment.
While investment in pay equity has declined 5% since 2024, it has increased 19% since 2020 and remains a focus for a majority of organizations (57%).
Althoug are debating the role of equity in DEI initiatives, a majority of organizations (66%) believe it should remain a core component.