The average effective wage increase budget among businesses for 2024 stood at 3.5 percent encompassing all categories of employees, signifying a 0.6 percent decrease compared to the previous year, according to the most recent data from the Troy-based American Society of Employers (ASE).
The analysis reveals a “robust” decline in total increase budgets within the category of non-exempt, hourly, and non-union employees, with the projected increase reaching 3.6 percent in contrast to the 4.6 percent of the previous year.
The survey analyzes both present and anticipated trends in salary budgets, pay structure modifications, and incentive-based compensation programs provided by employers.
“Recent data shows a notable decline in the wage gains experienced post-pandemic, reflecting a cooling labor market and easing inflationary pressures,” says Mary E. Corrado, president and CEO of ASE. “Employers are now adjusting their compensation strategies in response to a softening economic environment.
“As a result, wage growth expectations are becoming more moderate compared to the rapid adjustments seen in previous periods.”
As businesses navigate evolving challenges, a shroud of uncertainty envelops budget projections for the upcoming year, 2025, according to the anaylists. Specifically, the data shows that out of the 198 companies surveyed, roughly half (46 percent) of have yet to actively discuss salary adjustment options for next year. This finding is 4 percentage points lower than last year’s result of 50 percent.
In the previous 12 months, 70 percent of employers made market adjustments to remain competitive in the market. This market adjustment in compensation refers to an unscheduled change in an employee’s pay, made outside of the regular review cycle, often prompted by factors like retention needs, market shifts, exceptional accomplishments, or equity considerations.
The survey results suggest that most market adjustments were provided to specific individuals (75 percent) or specific positions (49 percent).
Other highlights of the ASE 2024-2025 Salary Budget Survey include:
- Average actual total increase budgets (i.e., any combination of merit, general or other increases) for 2024 were:
- 6 percent (Non-exempt, Hourly, Nonunion)
- 4 percent (Non-exempt, Salaried)
- 7 percent (Exempt, Salaried)
- 4 percent (Officers/Executives)
- Average projected or planned total increase budgets for 2025 are:
- 4 percent (Non-exempt, Hourly, Nonunion)
- 2 percent (Non-exempt, Salaried)
- 4 percent (Exempt, Salaried)
- 2 percent (Officers/Executives)
- The average pay increase percentage for top performers in 2024 was 5%.
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