Dive Brief:
- 2023 may see the trend of worker pay increases continue to rise, according to a Salary.com survey of more than 1,000 HR professionals that found nearly half of U.S. employers planned higher year-over-year budget increases next year compared to 2022.
- This follows a 2022 in which salary increases surpassed what many employers had planned to dole out, according to Salary.com. In all, 22% of organizations gave increases of between 4% and 5% this year, compared to just 12% in 2021 — an increase from the typical annual threshold of 3%. In 2023, pay increases may jump even higher; a quarter of respondents said they planned to give increases in the range of 5% to 7% in 2023.
- Regionally, employers in the Pacific Northwest offered higher pay than other areas of the U.S., including median total pay increases of 5% compared to the national average of 4%. Among industries, healthcare median total increases in 2022 hovered near 3%, less than the national median average.
Dive Insight:
Pay increases, like most areas of hiring in late 2022, are proving to be a headache for employers. The potential for an economic downturn has somewhat slowed a previously robust hiring market. Employers, though, are beginning to strategize around a downturn in ways to avoid losing their talent investments.
That may be why a recent Willis Towers Watson survey of employers found that 86% of respondents were hiring candidates on the higher end of salary ranges, with 31% stating that they were planning or considering adjusting employee salaries more frequently. A separate WTW report found that employers were planning to increase salaries by just over 4% on average in 2023 — the highest increase since 2008.
These and other indicators point to the possibility that 2023 will be a “banner year for employees seeking salary increases,” Chris Fusco, senior vice president of compensation at Salary.com, said in a statement.
Meanwhile, employees are concerned that pay increases will be one of the first things to go in the event of an impending recession, according to Workhuman’s recent Human Workplace Index report. But the organization’s report also noted that employees who were satisfied with their salaries and team pay models would be more likely to stay loyal to their current employers.
Relatedly, the state of the labor market continues to drive conversations about pay transparency, with more than half of employers in a recent iHire survey saying that they “always” included salary ranges in job postings. Employers have received some push from legislators on the subject. For example, California may soon join the list of state and local jurisdictions to implement pay disclosure requirements in job postings.
