The 4 Percent Raise is the “New Normal” According to Salary.com Trending Data
For the third consecutive year, the results show most companies are planning a median raise of 4 percent across all employee categories, from hourly employees to executives.
Waltham, Mass., Oct. 04, 2023 (GLOBE NEWSWIRE) -- Four percent is the new 3 percent according to Salary.com®’s Annual National Salary Budget Survey. For the third consecutive year, the results show most companies are planning a median raise of 4 percent across all employee categories, from hourly employees to executives. Salary.com conducted the survey of 1000+ organizations in May-June of 2023.
“For more than ten years the median raise was 3 percent but the 2022 bump to 4 percent has persisted,” said David Turetsky, vice president of compensation consulting at Salary.com. “I don’t see this changing in the immediate future, though we’ll need to keep an eye on inflation and the Federal Reserve for any additional rate hikes. While it’s holding steady, that could change.”
Some uncertainty is in the air, however, as almost a third of companies are planning lower YoY salary budgets next year. In 2022, only 13 percent of companies planned lower salary budgets. “While the 4 percent raise remains intact, some of the larger salary increases in the 5 to 6 percent range may have peaked,” said Turetsky.
SMBs More Sympathetic to Price Inflation but Execs Are Getting Smaller Bonuses
Employers will continue to support higher cost of living (COLA) increases next year. In 2023, average COLA increases remained above 2 percent, a trend that started in 2022 as inflation skyrocketed and recession fears dominated the news. Government and non-profit employees reaped the benefits of the largest 2023 COLA increases, with average increases at 4 percent and 3 percent respectively.
Like last year, smaller companies tend to be more sympathetic than larger companies in helping employees shoulder the burden of ongoing price inflation. Generally, the more employees a company has, the smaller the COLA increase was in 2023. For example, companies with 25-100K employees gave an average 1.6 percent COLA increase, where companies with fewer than 250 employees gave close to a 2.9 percent cost of living increase.
Executives at smaller companies, however, are taking a hit on their bonuses. In companies with less than 250 employees, executives are projected to receive a median 15 percent bonus in 2023, which is quite low compared to the 30 percent median bonus across all company sizes.
Other Survey Highlights
Houston’s Salary Budget Increase Surpasses San Francisco:
San Francisco has traditionally been a leader in high salary budgets with a median total increase of 5 percent in 2022, but the city’s median raises fell to 4 percent in 2023 and are expected to stay in the 4 percent range in 2024. Meanwhile, Houston’s 2023 median salary increase was above average at 5 percent, likely a result of the energy industry's higher than average increases.
For merit increases, which reward top performers, there were winners and losers in 2023. The industries with the lowest median merit increases were:
- Media (3.3 percent)
- Hospitality (3.2 percent)
- Healthcare (3.0 percent)
- Retail (3.0 percent)
Industries with the highest median merit increases in 2023:
- Energy and Utilities (4.1 percent)
- Aerospace (4.0 percent)
- Financial Services (4.0 percent)
- Construction (3.9 percent)
Salary structures: increases have traditionally been in the 2 percent range, though in 2023 they were notably higher at 3 percent. Planning for 2024 shows a return to a more traditional 2.5 percent. “With median raises at 4 percent over the past couple of years, salary structures really had to increase in 2023 to keep pace, though plans for 2024 again signal they may have peaked,” said Turetsky.
National Salary Budget Survey Methodology
Over 1000 human resource professionals across 20 diverse industries (including healthcare, manufacturing, financial services, retail and wholesale, hospitality and leisure, and education) participated in this year's survey, which closed June 23. Now in its 13th year, Salary.com's U.S. and Canada National Salary Budget Survey is designed to collect critical data on how organizations budgeted for salary increases in 2023 and are budgeting for salary increases over the next year. The survey also provides insight into current variable pay practices.
Please click here to review the survey summary.
About Salary.com
Salary.com® has been solving the complex human capital needs of global organizations for more than 20 years. Today, Salary.com’s 30,000+ software and data customers use our solutions to confidently hire and retain talent so they can better compete in a constantly changing landscape. Offering the most precise data set on the market, Salary.com provides more than 15,000 unique job titles across more than 225 industries using a powerful, proprietary AI framework. The company’s flagship product CompAnalyst® is the cornerstone of the compensation management software platform. It empowers organizations with a suite of tools that simplifies hiring, eliminates compensation guesswork, and increases retention. Employee trust depends on fair pay and Salary.com’s solutions get pay right. For more information, please visit www.salary.com.business.
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Julie Murphy Salary.com 617-967-5426 [email protected]