How Layoffs Are Affecting Salary Structures and Pay Transparency

As anyone in the HR and total rewards (TR) function can attest, the U.S. job market in 2025 is volatile. As organizations navigate rounds of layoffs, economic uncertainty and ever-evolving employee expectations, compensation strategy is under pressure to evolve rapidly. HR and their compensation teams are being asked to do more with less — keeping pay competitive, fair and transparent while entire departments are being downsized or restructured to some degree.

One area that continues to attract attention is pay transparency. A host of states (see table below) have laws (active or upcoming) that require employers to disclose salary ranges, either in job postings or upon request.

This trend shows no sign of slowing, even as organizations face layoffs and restructuring.

Even with legislative, economic and workforce change, organizations still need to post salary ranges and offer salary information to employees who ask for it. This transparency isn’t just about compliance — it’s become a baseline expectation. And during times of organizational fluctuation, open and honest communication about pay can be one of the few constants that help employees feel informed and valued.

Reductions Create a Rise in Reporting, Other Responsibilities

It’s a common misconception that layoffs pause or delay compensation planning efforts. In reality, the work continues — and intensifies. When an employer cuts 10% of its workforce, HR teams must immediately update reporting relationships, reevaluate roles and ensure that employees who take on expanded responsibilities are correctly leveled and paid within the appropriate salary range. In some cases, that means adjusting pay to reflect those changes. The salary structure doesn’t freeze when headcount drops; it becomes even more essential to keep it aligned with the market and consistent across teams.

At the same time, HR departments themselves are often reduced during these cuts, putting more strain on the people left to manage this work. The remaining HR/TR professionals are tasked with maintaining the integrity of pay systems, fielding more questions from employees and keeping the organization in compliance with laws that continue to evolve. For example, new laws in Illinois and Minnesota that took effect in January now require detailed salary disclosures in job postings.

Beyond the workload implications, consultants, pundits and practitioners also are seeing changes in how salary ranges are holding up against a shifting labor market. In certain fields — engineering and program management, for example — compensation is trending downward. Some roles have seen pay reductions between 15% and 20%, and in many cases, the job someone currently holds is paying better than the roles available elsewhere. That dynamic is keeping people in place who might otherwise be exploring new opportunities.

This creates an unusual tension. On one hand, employers must do more to retain critical talent and keep employees engaged. On the other, they’re working with tighter budgets and facing market-driven compression in some salary bands. While overall pay structures are still being reviewed to stay market-competitive, the value attached to certain roles is undeniably shifting. The risk here is stagnation — where employees feel stuck, not just due to a lack of opportunity but because the external job market no longer promises financial mobility.

In this environment, data becomes the backbone of good compensation decisions. Leaders need reliable market insights to guide salary adjustments, communicate confidently with employees and defend pay decisions internally. Without that foundation, it’s nearly impossible to maintain equity or trust.

Opportunities Amid the Change and Churn

The stakes are high. Employees are watching how their organizations manage this moment — how transparently they communicate, how fairly they adjust pay and how seriously they take compliance.

Laws will continue to evolve. For example, New Jersey’s new pay transparency requirements go into effect in June. HR teams need the tools and resources to keep up, even as they are navigating leaner headcounts and higher expectations.

Layoffs may reshape teams and budgets, but they don’t exempt organizations from their compensation obligations. If anything, this moment demands more from these employers and their HR/TR pros. That takes the form of better data, more thoughtful decision-making, and a renewed commitment to fairness and transparency. Through such efforts, organization can build trust and resilience for whatever comes next.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Compensation
• Finance and Budgeting
• People Analytics