Employers predict ‘modest’ 3.9% pay increases for 2024

Summary

U.S. employers are planning more modest pay increases for 2024 than they budgeted for 2023, with projected merit increases of 3.5%, total salary increases of 3.9%, and 8.7% of their employee population receiving promotions. Companies are taking a more cautious approach due to the tight labor market and concerns about inflation cooling. Most companies are in the early stages of developing their 2024 budget and are adjusting their compensation and benefit plans to fund the projected 4.6% pay increases. Employers are advised to take a more strategic approach to compensation investments to focus on attraction and retention of their workforce.

Q&As

AI Comments

👍 This article provides an insightful analysis of the current labor market and employers' strategies for 2024. It is important for employers to adopt more strategic approaches when creating their compensation plans.

👎 This article neglects to mention the potential impact of inflation on employers' compensation plans for 2024. Additionally, the projected budgets for healthcare services lag behind the national average.

AI Discussion

Me: It's about how employers are predicting a 'modest' 3.9% pay increases for 2024. They're also going to promote 8.7% of their employee population next year, which is a decrease from what they've done in the past.

Friend: Wow, that's really interesting. It sounds like employers are taking a more strategic approach when it comes to compensation, which could be beneficial for both them and their employees. But it could also mean that some employees won't get the pay raises they're expecting.

Me: That's right. Employers are trying to be more strategic with their compensation investments, but it could end up being a double-edged sword. On the one hand, it could mean better salaries for top performers, but on the other hand, it could mean that some employees don't get the raises they were hoping for.

Action items

• Research current labor market trends and adjust compensation plans accordingly.
• Develop a strategic approach to compensation investments to ensure pay increases are distributed fairly and equitably.
• Consider offering off-cycle increases to address retention concerns, counteroffers, market adjustments and internal equity.

Technical terms

Merit Increase

A merit increase is a salary increase given to an employee based on their performance.

Cost of Living Adjustment (COLA)

A cost of living adjustment (COLA) is an increase in wages or benefits to offset the effects of inflation.

High-Tech Industry

The high-tech industry is a sector of the economy that focuses on the development and production of technologically advanced products and services.

Consumer Goods

Consumer goods are products that are purchased for personal or household use.

Energy Industry

The energy industry is a sector of the economy that produces and distributes energy, such as electricity, natural gas, and oil.

Insurance/Reinsurance Industry

The insurance/reinsurance industry is a sector of the economy that provides insurance and reinsurance services.

Healthcare Services

Healthcare services are services related to the diagnosis, treatment, and prevention of illness and the promotion of health.

Compensation Budget

A compensation budget is a financial plan for allocating funds to pay employees.

Off-Cycle Increase

An off-cycle increase is a salary increase given to an employee outside of the normal salary review cycle.

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