U.S. Employers Forecast 3.5% Pay Increases in 2025, Payscale’s Salary Budget Survey Finds
July 31 2024 - 9:00AM
Today, Payscale Inc., the leading provider of compensation data,
software and services, released the results of its ninth annual
Salary Budget Survey, a key resource for HR and compensation
professionals determining pay increase strategies for the upcoming
year. The survey results reveal that U.S.-based employers are
budgeting for 3.5% raises for 2025.
“Given the stabilization of inflation and the easing of labor
market conditions, we’re seeing a slight reduction in planned
salary increases for 2025, though figures are still above the 3%
pre-pandemic baseline that employees have come to expect,” said
Ruth Thomas, Chief, Research & Insights at Payscale. “When we
zoom in on different industries and sectors, we observe that raises
can vary by up to 1.4%, indicating that labor is in higher demand
for some organizations.”
Key insights for 2025 pay increases:
Pay raise growth is on the decline — but slightly more
people are set to receive one.
- Going into 2025, organizations are anticipating pay increases
of 3.5% in the U.S. and 3.3% in Canada, a slight drop from actual
raises this year.
- So far in 2024, actual pay increases in the U.S. have averaged
3.6%, down from the 4% raises observed in 2023.
- Although pay increase rates are declining, 85% of employees
will receive a base pay bump this year, compared to 83% last
year.
Employees in certain industries will experience raises
exceeding 4%, while those in other lines of work will barely
surpass 3%.
- Government workers and those in the engineering and science
fields can expect to see higher-than-average salary increases,
averaging 4.5% and 4.2% respectively.
- Conversely, retail and customer service employees and those
that work in education — including teachers — will see raises of
just 3.1%, falling below the standard for most industries.
While most salary increase budgets remain unchanged,
organizations with higher and lower budgets both point to the
economy as a main reason for the shift.
- Just two in ten organizations anticipate a compensation budget
that’s higher than last year’s, and even fewer are expecting a
lower budget allocation. The majority of organizations (66%) expect
budgets to stay the same.
- For those with higher budgets, increased competition for labor
was the primary reason, followed by improved economic performance.
For those with reduced salary budgets, outsized increases in years
prior and concern about the economy were cited.
“Although perceptions of the current economy are mixed,
organizations in a growth phase and those facing headwinds are
competing for the same talent,” said Lexi Clarke, Chief People
Officer at Payscale. “Employers must have a compensation strategy
built on data to guide their salary increase budgets, or they risk
losing top talent this budgeting cycle.”
The Salary Budget Survey collected pay increase budget
projections directly from compensation professionals at 1,550
organizations in the U.S., Canada, and 14 other international
locations between April and June 2024.
Payscale provides the Salary Budget Survey as a free data
resource to help organizations get pay right. To download the
entire report, which includes insightful analysis broken out across
industry, revenue, company size, organization type, and geographic
segments, visit
Payscale.com/research-and-insights/salary-budget-survey-sbs.
About PayscaleAs the industry leader in
compensation management, Payscale is on a mission to help job
seekers, employees, and businesses get pay right and to make
sustainable fair pay a reality. Empowering more than 65% of the
Fortune 100, Payscale provides a combination of diverse and dynamic
data sources, experienced compensation services, and scalable
software to enable organizations such as Angel City Football Club,
Panasonic, Mars Global, eBay, American Airlines and PetSmart to
make fair and appropriate pay decisions.
Pay is powerful. To learn more, visit www.payscale.com.
Contact: Press@Payscale.com