Three Out of Four U.S. Employees Can Expect a Raise in 2009
Three Out of Four U.S. EmployeesCan Expect a Raise in 2009
Feb. 3, 2009 — A WorldatWork survey of more than 1,000 U.S. companies asked if employers plan to change their salary budget projections in light of the current economy. Results from the WorldatWork Special Update: 2008-09 Salary Budget Survey, the largest survey of its kind, found that across all employee categories, industries and regions, employers plan to lower their 2009 salary budget increase projections by 0.8 percentage points. This means average salary budget increases this year will be 3.1% compared to 3.9% when data was first collected in April 2008. Depending on where they work, 77% of the workforce can still expect to receive base pay raises. Major metro areas with the largest projected salary budget increases of 3.1% are: Philadelphia, Pittsburgh, San Francisco and Washington, D.C. (See table)
The data for the WorldatWork Special Update was taken and compiled in early December 2008, after the credit markets tightened and after the presidential election so that companies had as many of the variables needed to re-assess compensation plans for 2009.
“There is a silver lining in this dark economic cloud,” said Anne C. Ruddy, CCP, president of WorldatWork. “Employers are committed to rewarding employees; our data shows 77% of employees can expect a pay raise, especially high performers.”
When it comes to increases for officers and executives, nearly 17% of respondents reported zero salary budget increases in December 2008 compared to 3% in April 2008.
“This sends an important signal to employees that leaders are doing their part and sharing the pain brought on by these difficult times,” Ruddy said.
Key Findings
Across all employee categories, industries and regions, survey participants reported lower 2009 salary budget increase projections by 0.8% since April, taking the overall average from 3.9% to 3.1% nationwide.
Half of participating organizations (51%) made changes to their 2009 projected salary budget increases, with more than 90% of those making changes lowering their salary budget increases by an average of 1.6%.
For exempt salaried employees, 10% of participating organizations will be freezing pay in 2009.
For organizations reducing salary budget increases, 19% to 33% are cutting salary increase budgets to zero.
Fifty-one percent of all respondents characterized their organization’s 2008 year-to-date (YTD) financial performance as worse than 2007 with only one-quarter saying their organization was performing better than the year before.
More than half of the organizations minimizing their 2009 salary increase budgets cited a recent and/or anticipated decline in business as the reason for change.
Total Salary Budget Increases, by Major Metropolitan Area
Projected 2009 (April 2008 Data)
Projected 2009 (December 2008 Data)
%
n
%
n
NATIONAL
3.9
6,765
3.1
3,333
Atlanta
3.8
1,282
2.9
559
Baltimore
3.8
882
2.9
349
Boston
3.9
1,183
3.0
523
Chicago
3.8
1,641
3.0
764
Cincinnati
3.8
814
2.9
386
Cleveland
3.8
856
2.9
354
Dallas
3.8
1,297
2.9
566
Denver
3.9
1,097
2.9
456
Detroit
3.8
879
2.8
385
Houston
3.9
1,150
3.0
495
Los Angeles
3.9
1,431
3.0
639
Miami
3.8
837
3.0
346
Minneapolis
3.7
1,058
2.9
496
New York
3.8
1,405
3.0
606
Philadelphia
3.9
985
3.1
412
Phoenix
3.8
1,063
2.9
466
Pittsburgh
3.8
792
3.1
337
Portland
3.8
822
2.8
356
San Diego
3.9
1,012
3.0
388
San Francisco
3.9
1,164
3.1
504
San Jose
3.8
866
2.8
390
Seattle
3.8
929
2.8
382
St. Louis
3.8
862
2.8
354
Tampa
3.8
842
3.0
373
Washington, D.C.
3.9
1,378
3.1
466
Survey Methodology
Survey data was collected in December 2008 with a 3% margin of error. Survey respondents are WorldatWork members employed in the human resources, compensation and benefits departments of mostly large North American companies. Surveys were electronically sent to 2,254 WorldatWork members who participated in the 2008-09 Salary Budget Survey on behalf of organizations with operations in the United States. Of this population, 1,169 responses were received — a 52-percent response rate. Submissions from organizations with fewer than 10 employees and duplicate submissions were deleted from the data set. The final data contains 1,033 responses analyzed by statistical software.
Indeed, that's what I thought, there is a silver lining in the cloud! I believe this depicts what pay for performance is all about whilst meeting the reward startegy to attract, retain and motivate people. This piece of information has also given an encouragement to companies in the other parts of the world to continue the remuneration plans for 2009 and beyond.
Troy Farnlacher, CCP Director Compensation Programs Member Since: 10/22/1996 Comments: 1
This article would have been much more helpful if it broke out any differences found by industry as well - or if there weren't differences, at least mention that fact.
George B Reiter, CCP SVP Director Total Rewards Member Since: 6/1/1999 Comments: 1
This is not timely. The situation is very fluid and a lot has changed over the past two months since the data was collected.In the same Workspan weekly as this article was a story on a Tower's Perrin study done in January showing much more impact of the economic crisis. Tower's and other consulting firms are providing much more topical data with frequent updates than WAW.
Erika L Johnson Associate Compensation Consultant Member Since: 1/1/1999 Comments: 1
Do the final numbers include or exclude the 0% responses? In other words, is 3.1% the average of companies that are actually giving merit increases or the average of all companies?
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