U.S. Employers Budget for 3.8% Pay Increases in 2024, Payscale Salary Budget Survey Finds
Payscale’s Salary Budget Survey shows that actual pay increases in 2023 were 4% on average, which was an increase from the predicted 3.8% in last year’s survey.
- 78% of organizations in the United States and 81% in Canada say that their 2024 salary increase budget is the same or higher compared to last year
- 2024 pay increases are predicted to be 3.8% on average in the United States
- Pay increases were 4% on average in the United States in 2023, up from 3.8% predicted in 2022
SEATTLE, July 26, 2023 (GLOBE NEWSWIRE) -- Today, Payscale Inc., the leading provider of compensation data, software and services, launched its eighth annual Salary Budget Survey (SBS), revealing that pay increases in 2024 are predicted to be 3.8% on average in the United States, with higher increases seen in some states, industries, and other countries. According to the report, the proportion of organizations expecting their salary budgets in 2024 to either increase or stay the same as last year is 78% in the United States and 81% in Canada — a testament to the competitive labor market of the past few years and the high expectations workers have for raises against inflation. However, the market has cooled from the frenzy of the Great Resignation, with unemployment increasing and inflation dropping. The percentage of organizations expecting to lower their salary increase budgets in 2024 has risen from 9% to 22%.
Last year, employers were up against an inflation rate that sat at a 40-year high during salary budget planning season as well as a competitive labor market, which put pressure on organizations to go beyond the 3% salary increase that has been the standard for decades. Payscale’s Salary Budget Survey shows that actual pay increases in 2023 were 4% on average, which was an increase from the predicted 3.8% in last year’s survey. With inflation decreasing and the labor market loosening, employers want to bring pay increases down to more conservative levels in 2024. However, workers may continue to expect higher pay increases to regain some of the lost value eaten up by high inflation last year.
“Although employers may want to bring salary budgets down after recent wage growth, it is still very much an employees’ labor market with skills shortages persisting in some sectors,” said Ruth Thomas, pay equity strategist at Payscale. “When it comes to pay increases, the last few years have indicated that the new normal may be in the 3.5-4% range, but that could change if we go into a recession. In addition to salary budget reports, organizations will need to keep an eye on wage growth trends and continue to invest in up-to-date market data to remain competitive and ensure that pay is fair.”
Payscale’s Salary Budget Survey features insightful analysis sourced directly from compensation professionals broken out across by employee groups (non-exempt, exempt, managers, and executives) across geographic segments, industry groups, and key firmographics, which is designed to help companies build out their pay increase strategy in detail. This includes actual salary increases from 2023, planned salary increase budgets for 2024, and salary structure increase budgets. The report also includes promotional increase budgets for the United States and Canada.
The Salary Budget Survey analyzed data from 1,757 participating employers across the U.S., Canada and 14 international locations between May and June of 2023. The report and its methodology can be accessed in its entirety on Payscale.com. An Enterprise and Europe edition of the report will be available later in the summer.
About Payscale
As the industry leader in compensation management, Payscale is on a mission to help job seekers, employees, and businesses get pay right and to make sustainable fair pay a reality. Empowering more than 50% of the Fortune 500 in 198 countries, Payscale provides a combination of diverse and dynamic data sources, experienced compensation services, and scalable software to enable organizations such as Angel City Football Club, Target, Gainsight, and eBay to make fair and appropriate pay decisions.
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