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Old 9th May 2006
  #3
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Compression by itself will reduce volume, hence the term "gain reduction". When the loudest parts of your recording have been made quieter, you now have a quieter signal, with more headroom at the top of your signal, allowing you to boost the entire signal, noise and all.

What compression is doing is lowering dynamic range, bringing noise (quietest signals) up, and loud peaks (loudest signals) down.

So while compression itself is not changing the volume of the noise, the gain required to compensate for the compression WILL bring the noise floor up. Make sense?