newsline

Salary Budget Increases: A Case of 'No News Is Good News'

By Andrea Ozias, WorldatWork

Get the Data You Need from the Association You Rely On
Make sure your comp plans hit the mark to attract, motivate and retain the best talent. Check out our "WorldatWork 2017-2018 Salary Budget Survey" and get the information you need.

Aug. 1, 2017 — For the fourth year in a row, salary budget increases are stalled at 3%, but this year’s continued plateau may not be as negative as one presumes.

WorldatWork released the results of its annual salary budget increase survey today, reflecting data from the United States, Canada and 17 other countries. This year is the fourth consecutive year that respondents had projected 3.1% salary budget increases while actual numbers continued to hit 3%.

"Every year since the recession, we've missed the projection," said WorldatWork's Kerry Chou, CCP, senior practice leader for compensation. "This year, I was really expecting us to move past this plateau, especially considering both low unemployment and rising interest rates."

Yet, two key compensation headliners may be affecting this year's numbers, Chou said.

"There was a lot of regulatory-induced pay activity last year for organizations. Besides many local and state government increases to minimum wage rates across the United States, many organizations made changes to base pay rates as they looked down the barrel of revised overtime rules," Chou said. "The rule was blocked just prior to the effective date, but not before many companies had already enacted pay changes to accommodate the rules. At that point, it would have cost more in administrative work and frustration for affected employees to undo the changes. It's possible that, with some of these changes, a flat number in salary budgets is actually a good thing. There might be more going on that isn't being reflected in our numbers."

From a state-by-state perspective, there was not much variance among reported actual numbers for 2017. But look through the microscope at major metropolitan areas, and that's where the story starts to change. No city came in below the 3% number, but seven cities stood out:

  • Atlanta: 3.3%
  • Dallas: 3.2%
  • Los Angeles: 3.2%
  • Portland: 3.3%
  • San Francisco: 3.2%
  • San Jose: 3.2%
  • Seattle: 3.2%.

"In cities in Northern California up through Oregon and Washington, most of that growth has been driven by the high-tech sector," Chou said.

And, while base salary increase numbers may not look great, variable pay programs are seeing some gains.

Variable Pay Programs, 2016-2018 (United States)

 

Nonexempt Hourly Nonunion (Median)

Nonexempt Salaried (Median)

Exempt Salaried (Median)

Officers/ Executives (Median)

Average percent budgeted, 2016

5.0%

5.0%

12.8%

35.0%

Average percent paid, 2016

5.0%

5.0%

11.0%

34.0%

Average percent budgeted, 2017

5.0%

5.0%

13.0%

35.0%

Projected percent paid, 2017

5.0%

5.0%

12.0%

35.0%

"Despite companies wanting to maintain a handle on fixed costs, employees are still seeing increases in pay through improved variable pay plan payouts," Chou said.

In Canada, salary budget increases did not perform as well as in the United States. The actual 2016 total increase was 2.6%, while both the actual and projected number for 2017 is 2.8%. The drop in oil prices had a tougher impact on Canada than in the United States, Chou said. Add in a few natural disasters, and that was enough to take a toll on salary budgets.

Globally, India came in with the highest salary budget increase at 10.1%. However, considering the country's inflation rate, employees likely are simply keeping up with inflation. Other high points around the world can be seen in Russia (7.7%), Brazil (7.5%) and China (6.9%).

The "WorldatWork 2017-2018 Salary Budget Survey" received a total of 4,942 submissions.


Andrea Ozias is the director of publications, communications and news at WorldatWork.

Contents © 2017 WorldatWork. For more information, contact the Copyright Department at WorldatWork.

Have Questions?

Phone

+1 877 951 9191

USA and Canada

+1 480 951 9191

Other Countries

Online

Email Us