Compensation Planning

U.S. Salary Budget Increases Consistently Remain at 3%

According to WorldatWork’s annual Salary Budget Survey, employers in the United States report that the average 2017 total salary increase budget is 3.0%, the same as it has been for the past 3 years. Respondents are planning for a slight increase for 2017 salary increase budgets but only up to 3.1%.salary increase

“With a tight job market and reported financial gains, we might expect to see more growth in salaries,” said Kerry Chou, WorldatWork Senior Practice Leader—in a press release. “In the United States in particular, there are other factors that might explain this plateau in growth, including the increased use of variable pay or non-cash based rewards, or an overall more conservative pay philosophy. We are also looking closely at the impact several regulatory actions have had on salaries: the rising minimum wage in certain regions and the overtime rule. It’s possible that these changes may not have been reported as a salary budget increase in some cases. While the OT rule has been blocked, many organizations had already implemented the changes and chose not to undo them. So, with the continued 3 percent increase of salary budgets and these un-reported salary changes, this picture could be brighter for the workforce than it initially appears.”

Select Survey Highlights

  • Base salary increases (e.g., general increase/Cost-of-Living Adjustment [COLA], merit increase) are being awarded to 89% of employees in 2017, on average.
  • Promotional increases were awarded to 7.9% (median: 7.0%) of employees in 2016, one-tenth of a percentage point lower than the 8.0% average in 2015 (median: 7.0%). Of the promotional increases received, the size of the average pay increase remained unchanged at 8.4% (median: 8.0%).
  • The percentage of organizations using variable pay increased by one percentage point for the third straight year to 85% in 2017. This number has been hovering around 80% for many years. An improving economy could result in these variable pay increases while the fixed costs remain controlled.

State Level Data

The survey reports on salary budget increases for all 50 states as well as selected major metropolitan areas. As in recent years, the state salary budget increases for 2017 showed little variance. The increases ranged from 2.9% to 3.1%, with the median at 3.0%.

The metropolitan areas showed more variance, ranging from 3.0% to 3.3%. “The metropolitan areas that show the highest percentages, such as the Pacific Northwest, Los Angeles, Dallas, or Atlanta, tend to be in regions of the United States that are driven by high-tech or minimum wage increases,” Chou noted.

About the Survey

The “WorldatWork 2017-2018 Salary Budget Survey” is the largest survey of its kind with 4,942 responses from 19 countries representing nearly 15 million employees. The survey closed in May 2017. Survey respondents are WorldatWork members employed in the human resources, compensation and benefits departments of mostly large U.S. companies. All data include zero-percent responses.

For more information, or to purchase the full results, click here.