Report: Fewer Workers Got Bonuses in 2024, But Payments Were Higher

End-of-year bonuses were larger in December 2024 compared to the prior year but fewer workers received such awards, according to new research from Gusto.

The HR software company analyzed payroll data from more than 400,000 U.S. businesses and found:

End-of-year bonuses in 2024 averaged $2,503 — 2% higher than in 2023.
Communications industries — the highest-performing S&P 500 sector in 2024 — had the biggest leap by far, paying out 22% higher bonuses year-over-year.
Increases in other industries (10% in real estate, 9% in entertainment and recreation, and 8% in retail) also reflect a strong 2024 for those sectors and business owners’ optimism.
Bonus amounts in some service industries were down, including personal services (down 10%) and tourism and accommodations (down 7%), potentially signaling a cooling of wage growth for service workers after several years of post-pandemic wage increases.
The transportation and warehousing industries also saw a 10% decrease in bonus amounts, following a downturn in freight rates, demand and revenues.

“Instead of spreading bonuses more evenly, companies may be concentrating them among fewer employees to control overall compensation costs, especially in uncertain economic conditions,” said Nich Tremper, a senior economist at Gusto. “This allows them to reward key talent without inflating payroll expenses. Organizations may also be adjusting their compensation strategies due to economic factors like inflation, making higher bonuses necessary to maintain the purchasing power of top earners.”

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Which Workers Saw More, Fewer Bonuses?

Tremper also offered the following commentary related to shifts in the share of workers receiving bonuses in 2024, based on the Gusto research:

2% fewer workers received a bonus in 2024 than in 2023.
Nonprofits and associations had the highest leap (11.2%) in the share of workers receiving bonuses — potentially signaling both optimism about the future among those organizations and a desire to compensate their people for hard work.
An 8.2% increase in finance and insurance workers receiving bonuses reflects a year of “fairly significant” market gains.
Tourism and accommodations companies paid bonuses to 8.2% more workers — potentially as a retention strategy, as demand increases for their services, but job growth has slowed.
Healthcare and social assistance industries had the largest decrease in worker bonus share, paying them to 7.8% fewer employees. Some of that may be due to bonus tenure requirements in an industry that has added a number of new workers recently.
Food and beverage companies paid bonuses to 6.8% fewer employees in 2024 — following significant recent wage growth in that industry, some companies may have needed to decrease their bonus budgets after increasing base wages.

The Role of Bonuses in Overall Compensation Strategy

Bonuses and other variable pay are an especially popular compensation strategy in performance-oriented jobs or industries particularly focused on retaining skilled labor — and they spike during periods of economic growth, said Ruth Thomas, a pay equity strategist at compensation software and data company Payscale.

“Many companies delayed investments in 2023 and 2024 due to economic uncertainty, and now they’re shifting back to growth mode as conditions improve,” she said. “Variable pay offers a flexible lever to achieve these goals.”

It’s important to note that increases in bonuses don’t always predict or parallel wage growth, which tends to reflect changes in the cost of labor, Thomas said.

She noted that:

When competition for talent is fierce, organizations can strategically use bonuses to attract and retain workers while managing fixed costs or wage freezes.
During times of large wage increases, organizations may tighten bonus budgets to keep overall compensation costs under control.
Steady salary growth may be a larger retention priority than fluctuating bonuses in a tight labor market.

On the base salary side, U.S. organizations that participated in WorldatWork’s 2024-2025 Salary Budget Survey projected a 4% median increase for 2025 — the same increase they implemented in 2024.

According to Thomas, bonuses likely will remain popular in 2025, but organizations should not overlook other variable pay options such as equity or profit-sharing that give workers a measurable stake in corporate performance.

Consider also where bonuses fall in workers’ benefit priorities: Employees surveyed around holiday bonus time last year were more interested in cash bonuses than corporate stock options or equal-value paid time off (PTO), but they placed more value still on a four-day workweek or fully covered health insurance.

Ensure Bonuses are Equitable

In some cases, bonuses can reinforce existing pay inequities, said Gail Greenfield, executive vice president of pay equity and total rewards strategy and solutions at Trusaic, a pay equity and regulatory compliance software company.

“Unlike base pay, which accumulates over time and can be adjusted as needed to correct inequities identified in a pay equity review, there are administrative and perception-related hurdles to making retroactive adjustments to bonus awards,” Greenfield said.

She urged organizations to avoid perpetuating pay inequities through variable pay by analyzing proposed bonuses before they are finalized — particularly with annual bonuses, which are awarded at set times and allow for proactive review. The timing of those reviews is critical and often short, as organizations need to conduct a pay equity analysis and make necessary adjustments after managers input proposed bonuses into the business’ compensation system but before they are actually paid out.

With other types of bonuses that may be more variable in timing, impetus and amount, repeated pay equity analyses may not always be realistic, Greenfield said. Rather, organizations should:

Train managers to apply bonuses equitably.
Require those managers to document their rationale for variable pay decisions.
And, analyze their performance management processes to identify if a particular demographic group consistently receives lower performance ratings, or if those patterns emerge only under certain managers.

Greenfield also cautioned against using bonuses to close equity gaps in base pay.

“Attempting to fix an inequity in one form of compensation may unintentionally create new inequities in another,” she said. “Regular pay equity reviews help ensure that bonus distribution aligns with the organization’s commitment to fairness and equity.”

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