Overall, workers’ base pay in most industries is expected to climb an average of 3 percent in 2014. While that may seem relatively modest, it’s actually the biggest wage hike that employers have given out since 2008, according to a report by business consultant Aon Hewitt, which surveyed 1,147 U.S. employers on their pay practices for next year.
Not all compensation budgets will be divvied up equally. Employers are continuing a trend to motivate and reward their best workers. So if you’re considered a high performer – you didn’t just meet expectations, you far exceeded them – you might expect a 4.7 percent salary increase. If you often exceeded expectations, you might get a 3.6 percent hike.
In 2013, top performers saw salary bumps of 4.7 percent while average workers who met expectations received a 2.6 percent raise, the report noted.
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Salary increases have slowly inched up since 2009, when the recession pummeled businesses and workers’ raises hit an all-time low of 1.8 percent. In 2008, it was a different story. Wage increases reached 3.7 percent for salaried exempt employees.
Although the economy continues to improve and the jobs market shows steady gains, companies are still holding
the line on fixed costs, says Ken Abosch, a compensation, strategy and market development leader at Aon Hewitt.
“Companies aren’t feeling tremendous pressures to increase base pay to attract top talent,” Abosch says. “Instead, they are executing on a pay-for-performance vision that rewards employees based on a mix of business and individual results.”
Today, as many as
90 percent of employers say they’re using pay programs or performance-based compensation to reward their best and brightest. A decade ago, 78 percent of companies offered these kinds of incentives.
“We’ve seen a dramatic shift in the mix of compensation over the past decade, with variable [merit] pay assuming the largest component of compensation growth,” Abosch says. “Regardless of economic conditions, variable pay programs will continue to be the primary way employers differentiate rewards in the future.”
Where you live might also affect your bottom line. According to the report, workers in New York and Boston will see lower-than-average wage increases in 2014 (2.8 percent in each), despite the high cost of living there. Want a heftier raise? Move to Kansas City or Denver, where employees can expect a 3.2 percent bump, the report said.
Raises will be better than average for workers in the energy, oil and gas industries – employers will pay out an average 3.9 percent hike next year. Employees in construction and engineering can expect a 3.5 percent bump; mining will pay out 3.3 percent, the report said.
Raises are stingier for teachers and others in the education field: salary increases are projected to be 2.6 percent in 2014 and 2.5 percent in the health care and medical services area.
In any case, putting that salary bump to work for you by contributing more to your retirement plan is the way to go. Click here to see how your contributions affect your paycheck.
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