Average Salary Increase Projections
U.S. employers are charting an overall average salary increase of four percent for 2024, as per the Salary Budget Planning Survey by WTW. While this reflects a marginal decrease from the 4.4 percent increase observed in 2023, it is notably higher than the 3.1 percent salary increase budget in 2021.
Mercer's U.S. Compensation Planning Survey for November 2023 projects a slightly more conservative average salary hike of 3.8 percent in 2024, coupled with an average merit boost of 3.5 percent. The insights from Mercer provide a complementary perspective, capturing the nuances in employer salary strategies.
Factors Driving 2024 Raises
Economic factors, particularly high inflation and a persistently tight job market, are shaping employers' decisions on salary increases. With workers grappling with the aftermath of inflation, employers are keen to remain competitive for talent. Over 55 percent of surveyed employers cited inflationary pressures as the primary driver behind increased salary budgets.
Labor Market Dynamics
In the current competitive job market, characterized by concerns over voluntary turnover and attrition, employers are strategically exploring salary hikes to retain and attract top talent. However, to effectively navigate these labor market dynamics, it's crucial to go beyond conventional approaches. Integrated recruiting practices that focus on generating high performance can be a game-changer. By creating an environment where current employees authentically and organically speak highly of their employer, companies not only retain valuable talent but also attract new, skilled professionals. This approach adds a layer of authenticity to the employer brand, making it a compelling choice for prospective candidates.
Diversified Talent Strategies
Beyond salary increases, employers are adopting a multifaceted approach to talent management. Embracing workplace flexibility, focusing on inclusion, equity, and diversity, and enhancing the overall employee experience are becoming integral components of employers' strategies. This reflects an acknowledgment that talent attraction and retention go beyond monetary considerations.
Strategic Considerations for Employers
The economic uncertainties call for strategic thinking when it comes to pay tactics for the upcoming year. Organizations are urged to avoid making long-term decisions based solely on temporary economic conditions. The complexities of salary levels make it essential for employers to think strategically, considering the potential implications on their organization's financial health.
As we traverse the dynamic terrain of 2024, employers are tasked with balancing competitive pay structures, talent retention strategies, and the broader landscape of employee well-being. White Label Advisors remains committed to providing insights that empower employers to navigate this landscape strategically, ensuring the sustained success of both organizations and their valuable workforce.