Payscale Inc., the leading provider of compensation intelligence solutions, has released its 2025 Pay Confidence Gap Report, revealing a widening disconnect between employers and employees around salary expectations, fueled by pay misinformation. 

Generative AI is quickly becoming a go-to tool in salary research. The report shows roughly one in five employees (18%) turn to AI assistants like ChatGPT for compensation insights, and 70% of employers have noticed a rise in employees using AI to shape salary expectations. But using generative AI as a barometer of salary expectations is creating new tensions; 27% of AI-using employees say it inflated their expectations compared to other sources, and 38% of employers agree AI tools are driving salary demands higher than ever before.  

Social media platforms like TikTok, Reddit, Instagram, and Facebook are also major drivers of unverified salary information. With one in five (19%) employees using these platforms for their salary research, the spread of pay misinformation is further amplified. In fact, 63% of HR and business leaders surveyed have seen an increase in employees coming to them with salary requests based on inaccurate or unverified data in the last year. This is fueling employee distrust around salaries, with nearly half (48%) of employers reporting an increase in employee turnover due to salary-related conflicts over the past year.  

The report reveals that employers may be underestimating this pay confidence gap and falling short on effectively communicating pay decisions and strategies. Employers overwhelmingly believe their employees trust their pay decisions (93%). However, employees aren’t so optimistic, with only two-thirds (69%) reporting they trust their employer’s decisions on pay. Almost half of employees (41%) say they have never had a transparent discussion with their employer about how their pay is determined. Without clear communications from managers and HR leadership, employees are left to seek information from other sources like AI and social media.  

“The avenues for employees to educate themselves on salary expectations are expanding,” says Ruth Thomas, chief compensation strategist at Payscale. “Employees are still gaining knowledge from traditional sources like family and friends and industry salary guides, but AI and social media are driving up salary expectations without the verified data and role context needed to inform compensation. In the face of mounting misinformation, too many employers aren’t having the right conversations with their employees about pay. It’s critical they develop compensation strategies that are rooted in transparency, driven by data, and ensure compensation decisions are communicated clearly to improve pay confidence among employees.”  

Additional findings from the report include the following.  

• Salary conversations are becoming increasingly challenging for employers to navigate. Almost three-quarters (72%) of employers have seen an increase in employees negotiating salaries based on information they’ve found online in the past year, highlighting the importance of arming managers with the right data to navigate tough pay conversations. Two-thirds (66%) of employees would consider leaving their job is a pay conversation is handled poorly.  
• Cost of labor versus cost of living puts regional pay differences in the spotlight. While employers are more focused on the cost of labor, employees are feeling the strain of the rising cost of living. Two-thirds (66%) of employers reported an increase in the number of employees challenging their pay based on the local cost of living in the last year and 47% report internal conflicts over pay differences between employees in different geographies. As a result of these conflicts, almost half (49%) of employees have considered leaving their job in the last year because they don’t feel their salary has kept up with the cost of living in their city or region. 
• Economic uncertainty reshapes pay conversations and workforce decisions. The state of the economy is impacting salary conversations for both employers and employees. More than half (53%) of employers expect pay conversations to become more challenging over the next year due to economic uncertainty. A third (33%) are reassessing their pay structures and 32% report being more cautious with pay increases.  
• A growing focus on merit-based pay amid an ongoing talent crunch. Skills shortages are reshaping employee leverage in pay negotiations. Over two-thirds of employers (68%) say skills shortages have impacted employee bargaining power over the past year, and 70% have increased compensation beyond typical pay ranges to attract and retain top performers. Yet, a third (32%) of employees surveyed feel they are not adequately compensated based on their performance. Employees at lower job levels were more likely than managers or executives to feel that their performance did not affect their pay.