Finally, Raises Make a Comeback

Last Updated Jul 18, 2011 8:22 AM EDT

Salary increases are slowly starting to move back to pre-recession levels, according to a recent survey of the members of WorldatWork, a professional association whose members work in human resources and compensation departments, mostly at big U.S. companies.

It's about time. Everyone else is making up long ground: Boards of directors are giving themselves raises (mostly with stock), CEO pay is increasing by double-digits, and Wall Street is back to its big-bonus ways.

Most workers won't be nearly that lucky-but at least the wage freezes of the past few years seem to be coming to an end. Specifically:
  • There is some money for raises. Salary budgets increased by 2.8 percent in 2011. They're projected to rise by 2.9 percent in 2012. The figures for Canada are almost the same, even though Canada has largely escaped the housing bust that crippled the U.S. economy.
  • Most employees are getting raises. In 2011, 88 percent of employees got a raise to their base pay. In 2009, only 80 percent did.
  • Salary freezes are almost gone. Only 3 percent of employers say they're planning across-the-board salary freezes this year, compared to 43 percent in 2009.
  • High performers get 4.0%. In 2011, the average "high performer" at a company got a 4.0% raise. The "middle performers" got 2.7%, and the "low performers" got 0.7%
Evidence of falling wages
These numbers would appear to conflict with data from the latest unemployment report, which shows that wages are falling. The WorldatWork data, however, applies to people who already have jobs and will be in that same job next year. If an employer cuts a senior level position and hires a mid-level person to take on those responsibilities for less money, that's essentially a drop in pay. It would be reflected in the government figures but not the WorldatWork ones.

I know times are tough. But can bosses really expect to keep their best people by giving them raises that are, on average, only 1.3 percentage points more than the mediocre folks are getting? When the economy turns around, how many will seek out greener pastures?

RELATED Image courtesy flickr user AMagill
Kimberly Weisul is a freelance writer, editor, and editorial consultant. Follow her on twitter at www.twitter.com/weisul.
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    Kimberly Weisul is the co-founder of One Thing New, the free email newsletter for smart, busy women. She was previously Senior Editor at BusinessWeek, responsible for all coverage of entrepreneurship and for launching BusinessWeek SmallBiz, a bimonthly magazine. She is also a freelance writer, editor and editorial consultant.

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