A booming economy and low unemployment mean “slightly larger pay raises” for employees in the coming year, offering a number of opportunities while wallets are fat for advisors to illustrate the importance of 401ks.
A survey from Willis Towers Watson also found employers rewarded their top performers with the biggest raises this year and are projecting modestly larger discretionary bonuses next year in their ongoing effort to reward and retain the best performing employees.
Its 2018 General Industry Salary Budget Survey reports that U.S. employers project to give exempt, non-management employees (i.e., professional) average pay increases of 3.1 percent in 2019, compared with 3 percent this year.
Nonexempt hourly employees can also expect larger increases next year—3.0 percent in 2019 versus 2.9 percent this year.
Employers are planning smaller increases for executives, while steady increases are planned for management employees (and nonexempt, salaried employees.
Only 3 percent of companies plan to freeze salaries next year. Pay raises have hovered around 3 percent for the past decade, according to Willis Towers. The last year employers provided significantly larger increases was 2008 (3.8 percent).
The survey also found companies continue to reward their “star” performers with significantly larger pay raises than average performing employees. Employees receiving the highest possible rating were granted an average increase of 4.6 percent this year, 70 percent higher than the 2.7 percent increase granted to those receiving an average rating.
“After a decade of consistently flat pay raises, we are witnessing a slight uptick as companies are feeling pressure to boost salaries, given the low unemployment rate and the best job market in many years,” Sandra McLellan, North America Rewards business leader at Willis Towers Watson, said in a statement. “While companies have been able to hold the line on raises, the tides are changing. Many companies are establishing slightly larger salary budgets while at the same time focusing on variable pay such as annual incentives and discretionary bonuses to recognize and reward their best performers.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.