Dive Brief:
- Despite the dual pressures of inflation and a competitive talent market, more than one-third of the 1,000 employees surveyed in June by BambooHR said they had not received a pay increase during the previous 12 months.
- The research also revealed an imbalance between men and women, with 62% of women receiving raises during the past year compared to 66% of men. Women also received a smaller average pay increase than men at 5.24% to 6.39%, BambooHR said. Women in the survey were more likely to say they felt frustrated about their current financial compensation compared to men.
- Low pay during a time of rising costs may have consequences for employers, BambooHR said. More than one-third of respondents said their compensation directly impacted their mental health, including 54% of millennials and 44% of Generation Z respondents. Overall, nearly 1 in 4 employees described negative emotions regarding their compensation, according to the survey.
Dive Insight:
The stage appears set for the majority of U.S. employers to offer larger pay increases over the next year. A July Willis Towers Watson survey found that companies were planning an average increase of 4.1% in 2023, citing the impact of a tight labor market and enhanced employee expectations resulting from inflation.
More recently, a Salary.com survey of HR professionals found that nearly half planned higher year-over-year increases next year compared to 2022. Specifically, the company found that a quarter of the more than 1,000 professionals surveyed said their organizations planned to give increases in the range of 5% to 7% in 2023.
That trend follows reports that employees who switched jobs during the pandemic saw at times hefty increases upon joining their new employers. But not all industries saw the same degree of increases, if any, leading to anxiety during a wave of inflation in recent months, particularly among those in lower-paying jobs. Fears of a potential recession have added to those concerns.
Still, employers might be keen to capitalize on the demand for better pay, WTW said in an August report, given that pay constituted two of the three main challenges facing North American employers in their efforts to attract and retain talent. Employers have at times taken novel steps to ensure higher pay for workers; one multinational technology company made cuts to executive-level incomes in order to provide a 10% inflationary pay increase for all workers making less than $80,000 per year.
At the same time, employers and trade groups have increasingly adopted a more open approach toward pay transparency, whether on a voluntary basis or due to the impact of state and local laws. BambooHR’s report noted that there is more employers can do to improve their employee value propositions, including by emphasizing cultural changes. Employers also may be able to highlight total compensation packages beyond pay.
