Pay-raise budgets at U.S. employers have picked up from all-time lows four years ago, going from a mean of 2.2% in 2009 to 2.9% in 2013, according to the “WorldatWork 2013-2014 Salary Budget Survey.”
The survey shows that, while employers plan to loosen the purse strings next year, spending on pay raises will be far from lavish.
Forecasts show that the average raise in base pay for 2014 in the U.S. is projected to be 3.1%. If reality corresponds to that projection, 2014 will mark the first average increase above 3% since 2008.
Top performers can expect to earn even more, with raises averaging 4.6%.
“Salary budgets continue to improve, albeit slowly,” said Kerry Chou, senior compensation practice leader for WorldatWork. “This data adds to the recently released jobs numbers painting an economic picture that shows the U.S. economy is not gaining much momentum. Organizations continue to be challenged to find meaningful ways beyond 3% raises to reward talent.”
Other key salary survey findings
• Cities with biggest, smallest raises: Companies reporting data for employees in Houston, Los Angeles and San Francisco reported the highest actual increases in 2013, averaging 3.1%. Baltimore, Cincinnati, Detroit and Phoenix saw the lowest overall average salary increases, 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.
• Industry data: Pay increase budgets for government agencies 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 of 4.1%.
• Frequency of pay raises: During the recession in 2009, many employers froze pay. The average time between raises went up to 24 months. In 2013, the average time between increases held steady at 12 months.