Dive Brief:
- Companies in the U.S. are planning to increase employee salaries by an average of 4.1% overall in 2023, WTW’s recent Salary Budget Planning Report found. The projected increase is slightly higher than companies planned for 2022, and the highest increase since 2008, WTW said July 14.
- Seventy-three percent of respondents cited the tight labor market as the top reason for the increases, and 46% pointed to employee expectations for higher increases due to inflation. Twenty-eight percent said they made the adjustment in anticipation of greater financial returns.
- Companies are altering their compensation programs in other ways as well. More than one-third of respondents have changed or plan to change how often they raise salaries, with the vast majority of those adjusting to a salary review twice per year. About half are offering sign-on bonuses and equity/long-term incentive reward, and 21% are planning or considering doing so in the future.
Dive Insight:
Compensation has been top of mind for employers as they’ve navigated the tight labor market over the past year and look to a future that doesn’t appear to be letting up competition-wise, despite concerns about a coming recession.
Some companies have introduced big pay bumps to try to attract or hold on to employees. The top investment banks boosted intern salaries by 37.2% between 2021 and 2022 in an attempt to make up for poorer work-life balance than competing industries. Hit especially hard by the Great Resignation, the tech industry is increasing payment to fend off poaching of current workers and lure new ones through the door.
Employers are also increasingly aware of how inflation is hitting the workforce. Many workers — even comparatively high-salaried ones — live paycheck to paycheck, another recent WTW survey found. Despite companies’ attempts to reward workers, salary hikes reportedly have been meager comfort for many against the soaring rate of inflation; for some roles, like full-time college faculty members, wages fell considerably against the rate of inflation.
In addition to salary increases, some employers are pursuing innovative or different ways of addressing the strain of inflation, from introducing a one-time, inflation-offset bonus to allowing a continuance of remote work to alleviate commuting costs.
