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July 24, 2009

HR Fact Friday: Pay Raises Smallest in Decades

Filed under: Compensation — Tags: , , , , , 6:00 am

Recession-starved employee salaries have scarcely grown this year, and early predictions for 2010 aren’t looking much better. Two surveys released earlier this week found employers have increased salaries this year by the smallest percentage in decades.

Human resource consultants Watson Wyatt Worldwide, Inc. and Hay Group estimate that median pay raises for 2009 ranged between 2% and 3%. The U.S. Labor Department says pay for the average worker increased 2.2% in the year ended March 31, down from 3.2% in the year-earlier 12 month period.

For next year, the firms are projecting slightly bigger raises of 3%. That’s the smallest forecast increase in the 29 years Hay Group has done its survey.

The reasons are clear: In a recession that has eliminated 6.5 million jobs since the end of 2007, millions of workers have suffered pay cuts or have been forced to take time off withouth pay. Economists expect the U.S. economy to resume growing later this year, but the labor market typically recovers more slowly.

Analysts say the findings demonstrate the depth and volatility of the recession. A year ago, the consulting firms predicted average workers would see pay increases of 3.5% to 4% this year. But the new surveys show that raises fell well short of that.

Source: Salt Lake Tribune, July 20, 2009, Michael Sanserino


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