The Conference Board conducted a survey of 300 compensation leaders from large US corporations across 11 major industries to gauge projected increases in base pay budgets for the upcoming year. The survey revealed that these corporations are projecting an average increase of 3.9% for next year, which is slightly lower than the 4.4% increase they paid out in 2023. Despite this slight decrease, it is a tick up from the 3.8% increase that companies were paying out in the current year. Base pay budget increases are often seen as a proxy for the average raises employees may receive.
Respondents to the survey, mainly from larger US multinationals, indicated that elevated wages are expected to continue into the next year despite a slower pace of hiring and slight increases in unemployment. The shrinking labor supply is driving businesses to focus on retaining their current workforce, leading to sustained salary increases and higher real wage growth as inflation moderates. Many organizations plan to tap more of their pay increase budget throughout the year for promotions, to keep pay competitive based on external market pressures, and to recognize changes in role responsibilities or critical roles.
In response to the issue of pay equity, which has become a focus due to new state and local pay transparency laws, the Conference Board highlighted the importance of pay transparency and retention in influencing total compensation strategies within organizations. Compensation leaders also noted that they will continue to use non-base-pay strategies to increase overall compensation, such as various types of bonuses. However, they indicated a decrease in reliance on retention and sign-on bonuses compared to during the pandemic, showing a shift in compensation strategies.
Among the 11 industries represented by respondents in the survey, the highest planned overall increases were reported by compensation leaders in companies in insurance, energy/agriculture, and communications. On the other hand, the lowest planned increases were seen in trade and diversified services companies. It is important to note that projections from various salary surveys may differ based on the employers surveyed and the economic and business conditions in the future. The projections are just estimates, and actual base pay increases for the next year may vary depending on these factors.
Overall, the survey conducted by The Conference Board sheds light on the projected increases in base pay budgets for large US corporations in the upcoming year. Despite a slight decrease from the previous year, organizations are expected to prioritize retaining their workforce through sustained salary increases and non-base-pay strategies. The focus on pay equity and transparency within organizations, along with the use of various compensation strategies, indicates a shift in the approach to employee compensation and retention. As economic and business conditions continue to evolve, it will be interesting to see how these projected increases in base pay budgets translate into actual pay raises for employees in the coming year.
