Survey: Wage Freezes Expected to Drop Below 6% in 2015


Wage freezes, common for many employees during the Great Recession, have been plummeting in recent years and are expected to continue to decline with the improving Michigan economy, dropping from 67.8 percent in 2009 to fewer than 6 percent in 2015.

“As the economy continues to improve, the job market is also heating up, making it potentially more difficult to retain top employees who may have previously stayed due to fewer competitive opportunities,” says Mary E. Corrado, president and CEO of the Livonia-based American Society of Employers, which released the latest figures in a recent survey of employers.

While the majority of employers maintained a standard of 3 percent for budgeted salary increases for the 2014 work year, many have turned to variable compensation programs to entice their talent to stay — a trend the American Society of Employers expects to continue to grow each year, Corrado says.

The survey — taken by more than 200 small, mid-size, and enterprise organizations in Michigan — found that 73 percent of employers offered bonuses to their executives in 2014. In comparison, 66 percent provided bonuses to exempt salaried employees, and 55 percent offered to non-exempt employees.

“When we look at annual bonus trends year-over-year, we see the percentage of organizations offering an annual bonus to officers/executives has remained popular, yet fairly flat for the past several years,” says Jason Rowe, manager of survey services at the organization. “However, when we look at exempt and nonexempt employees, we’ve seen an increase, with nonexempt employees experiencing a 13 percent gain compared to where they were in previous years. Overall, this indicates these incentive strategies are gaining greater popularity across all levels of the company.”

Following annual bonuses, profit sharing and individual incentives were the second and third most often used compensation strategies. Looking at exempt salaried employees alone, profit sharing jumped by 4 percent year-over-year, Corrado says.