For example, suppose that an organization hires a new engineer one year at a starting salary of $35,000a year. Further suppose that the next year the organization wants to hire another engineer in the same field. Overall market conditions suggest that such engineers are now worth $37,000 a year, and the organization has to pay that rate in order to attract a new engineer. Presumably, the first engineer hired now has a year of experience and is performing at a reasonable level in the organization and ought to be paid more than someone who is just starting out. The organization is likely to avoid any major problems to the extent that it has the resources to adjust the existing employee's salary beyond the $37,000 level. On the other hand, if internal budget constraints and other considerations limit the organization's ability to adjust the compensation of its existing employees, then pay compression may result.