Conference Board Projects 3.9% Salary Increase Budgets for 2025

American employers, on average, are anticipating 3.9% salary increase budgets for 2025, a slight increase from actual growth of 3.8% in 2024, according to a new report from The Conference Board.

The research report, U.S. Salary Increase Budgets 2024-2025, provided signs of continued strength in American employment and compensation, as projected salary budget increases for 2025 remained near the two-decade-high pace that began in 2022. The Conference Board reported average actual salary increases of 4.4% for 2023 and 4.2% for 2022 — well above the traditional 3% annual increase seen over the previous decade.

“Despite a slower pace of hiring and slight increases in unemployment, elevated wages are expected to continue into 2025,” said Dana M. Peterson, the chief economist at The Conference Board. “A shrinking labor supply is driving businesses to focus on retaining their current workforce, leading to sustained salary increases and higher real wage growth as inflation moderates.”

This is the fourth large-scale salary budget survey to be released recently. Previous reports and 2025 projections included:

• WorldatWork: 3.8% mean U.S. salary increase budgets
• WTW: 3.9% median U.S. salary increases
• Payscale: 3.5% average U.S. salary increases

Click here to access top-level results from WorldatWork’s 2024-2025 report. In addition, the full report — covering base salary increases and merit budgets for 22 countries and in-depth salary budget insights for the U.S., Canada, India and the United Kingdom — is available for purchase. Report purchase also provides access to the U.S./Canada Online Reporting Tool to build customized reports based on industry, organization size and/or geographic area.

The Conference Board surveyed 300 compensation leaders across all industries for this year’s report.

According to its survey data, industries projected to provide the highest overall increases in 2025 include insurance, energy/agriculture and communications. Organizations reporting the largest planned incremental increases to their salary budgets over 2024 levels include those in communications, diversified services, energy/agriculture and trade.

Conversely, industries projected to provide the lowest overall increases are trade and diversified services. Organizations in consulting services and utilities report modest declines in planned 2025 salary increases relative to last year.

“To remain competitive and responsive to market dynamics, employers need to adjust their compensation strategies,” said Diana Scott, the U.S. Human Capital Center leader at The Conference Board. “Given fluctuating market conditions, leaders are increasing their use of compensation strategies that aren’t tied to base pay, like performance initiatives and other strategic priorities.”

The report spelled this out, providing findings and analytical commentary around several main storylines.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Compensation
• Finance and Budgeting