SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Pay increase budgets at U.S. employers have picked up from all-time lows in 2009, going from an average (mean) of 2.2% to 2.9% in 2013, according to the 40th annual “WorldatWork 2013-2014 Salary Budget Survey.” Forecasts show that the average raise in base pay for 2014 in the U.S. is projected to be 3.1%, which, if achieved, would be the first average increase above 3% since 2008.
“Salary budgets continue to improve albeit slowly,” said Kerry Chou, CCP, senior compensation practice leader for WorldatWork. “This data adds to the jobs numbers released last week painting an economic picture that shows the U.S. economy is not gaining much momentum. Organizations continue to be challenged in finding meaningful ways beyond 3% raises to reward talent.”
“Budgets that remain below historical levels heighten the need for better execution of pay programs, which includes pay transparency and good communication, knowledgeable line managers who can discuss pay decisions with employees, and meaningful differentiation in increases between high performers and other workers,” Chou said.
Other Key Salary Budget Survey Findings:
Major Metropolitan Area Data
Companies located in or reporting data for employees in Houston, Los Angeles and San Francisco reported the highest actual increases in 2013, averaging 3.1%. Employers in Baltimore, Cincinnati, Detroit and Phoenix reported the lowest overall average salary increase budgets at 2.8%. Most metropolitan areas reported average salary budget increases ranging from 2.8% to 3.1% for 2013, up slightly from 2.7% to 2.9% in 2012.
Pay increase budgets for public administration hit an all-time low of 1.3% in 2010 and 2011, but have risen to 2.3% in 2013. The Mining, Quarrying, and Oil and Gas Extraction industries are far above national figures, with average 2013 salary budget increases at 4.1%.
Number of months between increases
During the recession in 2009, many employers froze pay. The average time between raises went up to 18, even 24 months. In 2013, the average time between increases held steady at 12 months.
Tepid salary increase budgets are not stopping employers from rewarding talent. Survey respondents from U.S. companies are focusing on:
- Bonuses. Organizations are using other forms of cash and non-cash forms of compensation, including sign-on/hiring bonuses, spot bonuses, retention bonuses and project completion bonuses.
- More frequent adjustments. Adjustments to base salaries outside of the normal periodic (merit) increase have also increased substantially, at 72% this year compared to a low of 35% in 2010.
- Variable pay. Depending on employee category, 81-91% of eligible U.S. employees received variable pay for 2012. For officers/executives, 94% were eligible for variable pay in 2012, though only 91% were actually paid it in 2013.
- Increased differentiation based on performance. For 2013, high performers can expect a 4.1% average pay increase compared to only 2.7% for middle performers (a 152% difference).
About the Survey:
The “WorldatWork 2013-2014 Salary Budget Survey” is the largest survey of its kind with 5,207 responses from 17 countries representing nearly 15 million employees. WorldatWork collected survey data in April 2013. Survey respondents are WorldatWork members employed in the HR, compensation and benefits departments of mostly large U.S. companies. All data include 0% responses. An educational salary budget survey Webinar will be held on Aug. 21 (the Webinar is free for this year’s survey participants).
Credentialed journalists may request a complimentary copy of the survey report by contacting email@example.com
The Total Rewards Association
WorldatWork (www.worldatwork.org) is a nonprofit human resources association for professionals and organizations focused on compensation, benefits, work-life effectiveness and total rewards — strategies to attract, motivate and retain an engaged and productive workforce. WorldatWork and its affiliates provide comprehensive education, certification, research, advocacy and community, enhancing careers of professionals and, ultimately, achieving better results for the organizations they serve. WorldatWork has more than 65,000 members and subscribers worldwide; 95% of Fortune 500 companies employ a WorldatWork member. Founded in 1955, WorldatWork is affiliated with more than 70 local human resources associations and has offices in Scottsdale, Ariz., and Washington, D.C.
WorldatWork Society of Certified Professionals® is the certifying body for six prestigious designations: the Certified Compensation Professional® (CCP®), Certified Benefits Professional® (CBP), Global Remuneration Professional (GRP®), Work-Life Certified Professional® (WLCP®), Certified Sales Compensation Professional (CSCP)™ and Certified Executive Compensation Professional (CECP)™.
The WorldatWork group of registered marks also includes: Alliance for Work-Life Progress or AWLP, workspan and WorldatWork Journal.