U.S. Employers Boost Pay Budgets Despite Recession Concerns

SHRM, Stephen Miller, CEBS (08/01/22)

Salary budgets for U.S. employees are projected to increase in 2023, mainly influenced by a labor market with more open jobs than people to fill them and inflation’s impact on employees’ pay expectations, despite signs that the economy is slowing.

Consultancy WTW’s July Salary Budget Planning Report found that companies are budgeting an overall average increase of 4.1 percent for 2023, compared with the average actual 4 percent increase in 2022. These are the largest increases since 2008 but significantly lower than the inflation rate, which was up 9.1 percent year over year in June.

The survey was conducted in April and May 2022. In the U.S., 1,430 organizations responded.

According to the report:

  • Nearly 2 in 3 U.S. employers (64 percent) have budgeted for higher employee pay raises than last year, while two-fifths (41 percent) have increased their budgets since original projections were made earlier this year.
  • Less than half of companies (45 percent) are sticking with the pay budgets they set at the start of the year. Some companies are also making more-frequent salary increase adjustments. More than one-third (36 percent) have already increased or plan to increase how often they raise salaries. Among those respondents, the vast majority (92 percent) have or will adjust salaries twice per year.