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Small raises on the horizon for most companies

Tim Gould
by Tim Gould
July 12, 2011
1 minute read
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Looks like a lot of companies — yours might be one of them — are opening the coffers for raises this year. But don’t expect employees to be overjoyed: The pay hikes aren’t likely to cover the inflation rate.
Compensation consultant World At Work recently canvassed 2,200 U.S. companies, asking for salary-budget increases for their companies in 2010, for 2011, and what they’re planning to give workers 2012.
Some highlights of the results:
Average increases for non-union, nonexempt hourly employees

  • 2010: 2.4%
  • 2011: 2.9%
  • projected for 2012: 2.9%

Average increases for exempt salaried employees

  • 2010: 2.5%
  • 2011: 2.9%
  • 2012 projection: 2.9%

Average increases for  top executives

  • 2010: 2.5%
  • 2011: 3%
  • 2012: 2.9%

Other results of the survey:

  • In 2009, about 35% of those surveyed said they were under a salary freeze; this year only about 8.5% said they were under a freeze.
  • Total salary budget increases were consistent across states and metropolitan areas; no single region stood out as being exceptionally low or high.
  • Pay for performance continues to be emphasized. With small salary budget increases, the respondents reported that the bulk of the increase will go to high performers, and very little or no increase will go to low performers.

Won’t amount to much
The survey’s pretty good news for employees — a small raise is better than no raise at all — but, according to a recent article in the Wall Street Journal, it’s not going to really mean much.
Why? Because the rate of inflation for 2012 is projected as 3.6% — meaning that 3% raise is going to end up feeling like a small pay cut, according to a spokesman for HR consulting firm Hay Group.

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