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Base Pay for U.S. Employees Expected to Make Modest Gains in 2016

WorldatWork's annual survey forecasts salary budgets for the United States and 18 countries

August 4, 2015 ' WASHINGTON, D.C. —  United States employees could see a modest boost in pay for 2016 according to the 42nd annual "WorldatWork 2015-2016 Salary Budget Survey." Forecasts show the average 2016 budget for raises in the United States is projected to be 3.1 percent. Budgets increasing pay at U.S. employers have improved slightly since 2013, up from 2.9 percent to 3.0 percent in 2014 and 2015.

WorldatWork, a nonprofit human resources association and compensation authority, released today its annual salary budget survey which covers projected budgets for base salary increases, promotional increases, total rewards strategies and human capital expense strategies. Participants for the 2015-2016 survey represent companies from 19 countries including Canada, Australia, China, India, Russia and the United Kingdom.

Average total salary budget increases in the United States have been steadily rising from the all-time lows recorded during the 2009 recession when the average salary budget increase reached 2.2 percent (mean). Organizations continue to converge on increased budget amounts between 2 and 4 percent. Last year, respondents projected that the 2015 average total salary budget increase across all organizations, employee categories, regions and industries in the United States would reach 3.1 percent (median: 3.0 percent), but actual numbers fell short.

Salary Budget Survey - WorldatWork.org

"With the slowing of growth in budgets for salary increases, there is speculation of a "new normal," said Alison Avalos, sr. manager of research for WorldatWork. "Although many reports indicate improvements in the economy, the competition for talent hasn’t heated up employers are able to retain the talent they need with current practices. The thawing of prevalent pay freezes in 2009 have helped overall averages recover to the 3.0 percent mark, but this may be the new normal until additional pressure on wages comes from somewhere else."

Major Metropolitan Area Data

The salary budget increase averages of participating organizations reported a variance among major U.S. metropolitan areas, although the medians are firm at 3.0 percent. While there are no extreme outliers, a few areas deviated from the national average trend line this year. The following cities reported a rise from 2014 to 2015 by three to four-tenths of a percentage point in average total salary budget: Detroit, Miami, Portland, San Diego, St. Louis and Tampa. Projections for 2016 are again diverse among cities when looking at average budget figures, stretching from 2.9 to 3.2 percent.

Industry Data

Of the industries with a survey sample greater than 30, eight reported a drop in the size of mean salary increase budgets. Mining, Quarrying and Oil and Gas Extraction, Construction, Agriculture, Forestry, Fishing and Hunting which have been leading all average budget increases fell from 0.6 to 1.3 percentage points this year. Mining, Quarrying and Oil and Gas Extraction is at the bottom of the list with a 2.5 percent salary budget increase after increases of 4.1 and 3.8 percent the previous two years.

Pay for Performance

Even though the size of all salary increase budgets, including merit budgets, remains on the conservative side, there is still good evidence of differentiation of awards. Looking at employee performance in 2014, organizations averaged a 2.7 percent merit increase for midlevel performers (median: 2.8 percent) and a 4.0 percent payout for top performers (median: 4.0 percent).

Compensation Program Prevalence

The 2015 data shows that 76 percent of organizations are now utilizing market-based pay increases, a 2 percentage point improvement from 2014. The usage of most types of bonus programs has also increased, consistent with findings from other surveys focused on bonuses that WorldatWork has conducted. Most programs held steady in their usage since 2014, with a few declining only slightly. Noncash recognition and rewards are one of those categories showing a decline, from 2 percentage points down to 49 percent.

Global Perspective

In 2014, all countries participating in the survey reported salary increase budgets at or above 2013 levels. This year, most of the 19 participating countries report a marginal increase with a few declines. In 2014, China was the leading country in the growth of its average salary budget increase with 8.2 percent (median: 8.3 percent). This year, China’s average increase has dropped to 7.8 percent (median 8.0).

About the Survey

"WorldatWork 2015-2016 Salary Budget Survey" is the largest survey of its kind with 5,583 responses from 19 countries representing nearly 15 million employees. (Global Top-Level Results) WorldatWork collected the survey data in April 2015. Survey respondents are WorldatWork members employed in the HR, compensation and benefits departments of mostly large U.S. companies. All data include zero-percent responses. WorldatWork will host a Tweet Chat on Sept 2. Join the conversation using hashtag #wawsbs.




About WorldatWork®

The Total Rewards Association


WorldatWork ( www.worldatwork.org) is a nonprofit human resources association for professionals and organizations focused on compensation, benefits, work-life effectiveness and total rewards — strategies to attract, motivate and retain an engaged and productive workforce. WorldatWork and its affiliates provide comprehensive education, certification, research, advocacy and community, enhancing careers of professionals and, ultimately, achieving better results for the organizations they serve. WorldatWork has more than 70,000 members and subscribers worldwide; 80 percent of Fortune 500 companies employ a WorldatWork member. Founded in 1955, WorldatWork is affiliated with more than 70 local human resources associations and has offices in Scottsdale, Ariz., and Washington, D.C.

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