Salary.com’s Annual U.S. National Salary Budget Survey reveals that 41 percent of organizations plan on having a higher salary increase budget in 2022 than they did in 2021, representing the first significant shift in merit increases in the last 10 years of survey data. For perspective, last year just under 10 percent of organizations planned a higher salary budget increase than the prior year. The survey was conducted in June of 2021 by Salary.com, the leading SaaS provider of cloud-based compensation market data, surveys and analytics.
The 2-3 Percent Raise is on the Decline
While the prevailing salary increase rate remains at three percent, the percent of organizations giving 2-3 percent increases has dropped to its lowest point since 2019.
For 2022, 12 percent of organizations intend to give 4-5 percent increases, versus just 7-8 percent of organizations in 2021. Of note, these 4-5 percent planned increases hold steady across all job categories, from hourly employees up to the executive level.
“This is the first sign of a notable shift in salary budget increases in 10 years, particularly for hourly employees who have long experienced stagnant pay,” said Chris Fusco, Senior Vice President of Compensation at Salary.com. “Minimum wage legislation sweeping the country is a big factor. But the reemergence of lower level workers executing their market power is undeniable. Aging Baby Boomers and pandemic-related worker shortages have created this scenario where we have more jobs than we have people willing, or able, to work.”
Other categories in the survey, such as variable pay and salary structure increases, fell in line with data from prior years, In terms of pay practices, the vast majority of organizations surveyed utilize a common date for employee pay increases (86 percent), with the months of January and April serving as the most popular months.