Report: Michigan Employers Budgeting for Modest Pay Raises

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The American Society of Employers has released its annual salary budget survey findings, which included participation by 225 manufacturing, trades, and service organizations from across Michigan.

“Given improvements in the economy, notably the job growth, we might have expected to see more significant increases to budgeted salary increases,” says Mary E. Corrado. ASE’s president and CEO. “However, employers remain conservative in their approach to pay administration and have shifted to other cash and non-cash incentives to reward performance.  This trend is likely to continue based on data collected in ASE’s Quarterly Economic and Employment Survey which also points to some softening in the economic outlook in the near-term.”

The survey also illustrates the majority of merit dollars granted are going to the employer’s top performers, but 61 percent of organizations are opting to spread their 3 percent merit budget pools across all of their employees instead of focusing on their top performers. By giving potential underserved money to low performers, money is taken away from top performers, putting them at an increased risk of leaving.

Wage freezes also continue to remain low, with 6 percent of employers surveyed experiencing a wage or salary freeze at some point in 2017. Similarly, 6 percent of employers surveyed anticipate a wage or salary freeze at some point next year.

The report also shows that employers continue to rely on variable pay programs to reward performance, with 84 percent of employers offering variable pay to at least one employee group. The average expected annual bonus payout, as a percent of salary, in 2018 remains steady at approximately 5 percent for nonexempt hourly nonunion and nonexempt salaried employees, 10 percent for exempt salaried employees, and 31 percent for officers and executives.

To obtain a copy of ASE’s salary budget Survey, contact ASE’s compensation and benefits surveys department at surveys@aseonline.org or 248.223.8051. This survey is available free of charge to ASE members, and for $525 to non-members.

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