U.S. companies are slowing down on the pay raise train next year. According to Mercer, they’re planning to dial back the growth of employee pay budgets from 4.1% this year to 3.9% in 2024. The job market is easing up a bit, inflation’s cooling off, and everyone’s got their eyes squinted at the murky economic horizon. Lauren Mason from Mercer says, basically if things keep calming down, the plan is to cut back even more on compensation bumps for 2024. What’s on the chopping block? Budget growth for merit increases is getting a trim too, dropping to 3.5% from 3.8% this year. Fewer promotions are in the cards – only 8.7% of folks are getting a leg up next year compared to 10.3% this time around.
Sounds like Mercer’s not the only one playing the cautious card. The Conference Board’s survey shows that about 3 out of 4 big shots (74% of CEOs, to be precise) are looking at raising wages by at least 3% in the coming year.
CEO talk points to wages being the main driver for inflation. They’re eyeing wage growth as the big culprit over the next 18 months. But as inflation pressures ease up, the actual wage gains in real terms have slowed too, dropping from 1.3% in June to 0.5% in August, as per the Labor Department. The job scene’s getting more balanced too – unemployment bumped up to 3.8% in August from 3.6% in June, which kind of aligns with the rising supply of workers.
The job-hopping scene might slow down a tad as the job market cools, but lower-wage workers are still expected to do a bit of musical chairs with jobs. It’s all about securing better pay and financial stability, even with a slightly calmer job market.
Though the forecasted pay raise bump might be smaller next year, it’s still a nudge higher than the 3.8% hike seen in 2022, Mercer points out. They’re still in the early stages of budgeting, though, with around 85% of employers in the early planning phase.
