Early Look at 2009 U.S. Salary Increase Budgets

A first look at 2009 salary increase budgets comes courtesy of Economic Research Institute's (ERI) evergreen salary increase survey report. 

According to ERI, early data suggests an average salary increase budget of about 4% for 2009, down only slightly from the same source's 2008 average of 4.1%.

What Dr. David J. Thomsen, ERI Director, had to say about these initial findings:

The quickest way for companies to cut payroll costs is to lay off personnel.  This will be followed by those who freeze salaries across the board and we are not seeing that yet. US companies are in a bind for talent and skilled knowledge workers. ERI is looking, but we’ve not seen evidence of anything other than concern about the pay of key staff, from those of our 15,000 subscribers who are entering data into our ongoing Survey. There’s no recession for key skills and talent. The major disconnect is between wage increases and what’s happening with cost-of-living.

Creative Commons Photo "Egor: New Look" by Bolshakov

Comments

[Frank]

Ann,

I didn't know that wages and the cost-of-living were previously "connected." If they were, that would have been in violation of one of the ten commandments of compensation management which tells us that they should not be mentioned in the same breath. It will be interesting to hear the discourse about the cost of living and the cost of wages now that the former will be in full gear.

Frank

[Ann Bares]

Frank:

You're correct - it is a violation of the ten commandments of compensation to mention these in the same breath, and it is something I am always/forever warning my clients about (as in "we pay cost of labor, not cost of living"). HOWEVER. And this is a big however. While we (compensation professionals) are well-advised to strike the term cost of living from our communication with employees, I think it does behoove us to pay attention to the interplay between cost of living and cost of wages, so that we have an informed sense of whether our employees are - or are not - making headway. In my annual salary planning seminars, I typically show a chart that displays COL and average wage increase data for the past 8-10 years, just to ensure that people see and understand what is going on here, in a macro-economic sense.

That's my point of view, anyway. So ... your caution is well placed, but I think ERI is within reasonable limits to mention this to the employers who track and purchase their data.