As Americans try to cope with the highest inflation in 40 years, employers around the U.S. plan to offer their workers next year an annual raise of 4%, a new survey shows.
That's roughly in line with the median pay bump employees got in 2022, according to Salary.com, a provider of compensation software and analytics. Last year was the first year in roughly a decade that employers significantly upped their employee compensation budgets.
"Over that past 10 years, because inflation has been very low, the numbers have been very low and remarkably similar from year to year," said Andy Miller, Salary.com's managing director of compensation consulting.
The survey, conducted in June, polled more than 1,000 companies across diverse sectors.
Yet while typical salary increases have risen in recent years, they remain well behind the current 8.5% annual rate of inflation.
The sweetened pay hikes reflect three types of raises for workers: general increases in compensation, also known as cost-of-living adjustments to; merit increases based on an employee's performance; and market adjustments that bring workers whose salaries are out of whack in line with their peers.
"Many organization give out at least two, if not all three of these types of raises," Miller told CBS MoneyWatch.
Starting in 2021, cost-of-living increases rose above 2% for the first time in years, with Salary.com finding that smaller businesses typically offered more generous raises than larger employers.
"This could speak to the relationship smaller companies have with their employees, versus at bigger companies where you're just a number," Miller said. "They're really reaching out and wanting to make sure employees feel cared for, and maybe they have to do that to compete with bigger companies."
Indeed, companies of all sizes are competing for talent in a tight labor market, and are grappling with worker shortages, particularly in low-paying industries like hospitality.
By contrast, raises for health care workers lagged other industries, with the median salary increase for the sector landing in the 3% range. Raises for health care workers are constrained by limits on what insurance companies and government programs like Medicare are willing to pay for health care services.
"They are the intermediary between people receiving health care and providing health care," Miller said. "And the government and insurance companies are always running a little behind the times."
for more features.