We have collected various key data to provide a window into what can be expected on the salary horizon for the U.S. during the upcoming year.
American employers are prepared to increase wages by approximately 3 percent in 2017. This is the sixth consecutive year that U.S. organizations have increased wages at this rate after a time of suppressed salary growth immediately after the economic recession in 2009, according to the Hay Group division of Korn Ferry.
WorldatWork.org has also released its 2016-2017 Salary Budget Survey results. The survey received 5,759 responses from its members, through which the association discovered that U.S. employers’ total average salary increase budget for 2016 is 3 percent (median and mean) for the third consecutive year.
Hay Group has also consistently seen a 3 percent median increase throughout most employee groups and industries (from executive to clerical).
In a survey that Willis Towers Watson Data Services conducted, 98 percent of the responding 967 U.S. companies plan to offer their employees raises in 2017, with salaries for exempt non-management employees to increase by 3 percent; the same rate of increase they received for the past three years. Employers also intend to give a 3 percent average salary increase for management and nonexempt employees.
Despite the prevailing forecast of a 3 percent increase among organizations that conduct salary budget surveys, not all employees may necessarily receive this number. Hay Group has seen top performers in companies receive increases between one and a half to two times their median salaries. Therefore, top performers can optimistically expect to welcome salary increases of between 6 and 8 percent.
What are some reasons that the projected salary increase has remained at 3 percent?
- During 2016’s first quarter, U.S. economic growth reached a nominal 0.8 percent, increasing in the second quarter to a modest 1.2 percent, despite a decrease in the unemployment rate from 9.5 percent to 4.9 percent since June 2016.
- U.S. employers are cautious with their pay-budget forecasts due to the conflicting signs of the state of the U.S. economy.
- Several companies have shifted from fixed salary increases to rewarding employees via annual or merit bonuses, as well as other performance-based compensations.
- Sixty percent of companies paid employees in the form of lump-sum base pay awards in 2016 during employees’ maximum salary range.
- Although employees in most U.S. cities can expect to have salary increases, in some cities, workers are expected to see higher than average variable pay.
According to Sandra McLellan, Director of Willis Towers Watson, “Incentives tied to individual and company performance continue to play a greater role in an employee’s total rewards package.” Employers have more discretion rewarding top performers through incentives compared to giving them a raise, McLellan added.
McLellan’s advice to employers is to evaluate the whole of their rewards strategies and incentive programs so that workers will remain engaged and loyal to their company, rather than seeking employment elsewhere.
Stewart, Cooper & Coon, has helped thousands of decision makers and senior executives move up in their careers and achieve significantly improved financial packages within short time frames. Contact Fred Coon – 866-883-4200, Ext. 200