If you have a job, you will most likely receive a more remarkable raise in the following year.
According to The Conference Board’s latest wage survey of 240 businesses, the median annual base pay is anticipated to rise by an average of 3.9 percent in 2022, which is the most significant one-year projected increase since 2008.
Employers were asked how much they expected wage expenses for their existing workforce to rise in 2022. As a result, the 3.9 percent increase does not include bonuses or other one-time payments that a business may provide.
Why the big increase?
Given the labor scarcity, over half (54%) of businesses said they needed to raise pay to appeal to workers.
With the cost of living continuing to rise, employers are expected to offer higher pay to new workers to fill jobs. According to the Conference Board, pay compression occurs as a result of this. This means that the wage gap between brand-new recruits and tenured or higher-ranking current employees is reduced.
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When more seasoned workers believe their pay difference has decreased, they may look for new employment in the tight labor market, resulting in a high turnover rate among more experienced employees.
According to a Manpower survey, the top three reasons employees give for wanting a raise include: “to increase potential earnings,” “because it’s time for an upgrade,” and “I’m not happy with my current salary.” When asked what factors would be most important in determining their pay level, 38 percent of respondents said salary increases.
Employers’ perception of wage growth has evolved rapidly in the past year. When the labor shortage was less severe, and high inflation was not yet regarded as persistent, in April, when costs were much lower, they were asked the same questions about their anticipated 2022 wage cost increases. They predicted those expenses would rise just 3% then.
If you look for new work and return to your employer with a competing offer, you may see an even larger boost in your base pay. Alternatively, you may accept the new agreement.
“People moving jobs are seeing much greater wage increases than those who stay put,” Levanon added.