For the second year in a row, salary increase budgets in the United States grew slightly to a 3.2% average (median: 3%), meeting the previous year’s projections. After some stagnation 2017 (3%), salary budgets have increased by 0.1% each year since, a trend that is expected to continue in 2020.
This was the main reveal from WorldatWork’s 46th “Salary Budget Survey,” which is based on 5,298 responses from WorldatWork members. The data covers nearly 14 million employees worldwide from 17 countries, in addition to the U.S. and Canada.
Pay equity is an increasingly significant issue for organizations and it’s affecting pay increases. The survey found that 42% of organizations plan to budget for pay equity adjustments in 2020, which is up from 37% in 2019. When pay equity adjustments are not budgeted, 46% of respondents said company savings will be used for adjustments in 2020.
“Increased investments to ensure fair and equitable pay practices, in tandem with exceptionally low unemployment and climbing minimum wage rates, are likely contributing to the upward trend in salary budgets,” said Alison Avalos, CCP, CBP, GRP, director of content at WorldatWork.
The report captures base salary increases, merit budgets, salary structure adjustments (U.S.), promotional increases (U.S.) and variable pay plans (U.S.).
- Promotional Increases: While there was no growth in the number of employees receiving promotional increases, the size of the average promotional increase grew to 8.9%.
- Merit Budgets: Average merit increase budgets for 2019 were reported at 2.9%, which represents a slight shift upward from 2018. Respondents projected an additional 0.1 percentage point increase in 2020 to a mean and median of 3%.
- Metro Data: The largest average salary increase budgets are in Boston, Washington, D.C., Denver, San Francisco, Portland, Oregon, San Diego, San Jose, California and Seattle.
- Salary Structure Adjustments: In 2019, the reported overall average salary structure adjustment is 2.2%, which represents an upward shift from 2% in 2018 and is slightly higher than the projected 2.1%.
- Around the Globe: With an average budget increase of 9.9%, India maintains the largest salary increase of all countries surveyed. Conversely, Russia and Brazil experienced big drops, by 0.7 and 0.5 percentage points, respectively.
“Companies need to recognize that while the salary budget increases are relatively modest, in the current work landscape salaries are just one component in a compensation package,” Avalos said. “Users of Salary Budget Survey data need to frame their analysis and use of the data with this mindset. Other recent research indicates that beyond salary, Total Rewards benefits that provide a great work experience and a great life experience are valued highly by employees and companies are addressing these needs to remain competitive.”
About the Author
Brett Christie is a staff writer at WorldatWork.