Employers Give Rare Glimpse Into 2025 Wages: What to Expect for Big Raises
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Next Year’s Salary Budgets: A Slower Pace But Still Healthy
Next year is shaping up to be another solid one for pay bumps. Employers say they’re increasing their salary budgets by about 3.5% to 4% on average, according to several recent surveys. The budget increases mark a slight dip from recent pandemic highs but remain above the pre-pandemic norm of 3%.
Salaries to Continue Growing into 2025
“Despite a slower pace of hiring and slight increases in unemployment, elevated wages are expected to continue into 2025,” said Dana M. Peterson, chief economist at The Conference Board in a recent statement.
Average Salary Budgets for Next Year
The business think tank surveyed 300 private-sector companies for its latest salary budget report, which was released last week. On average, employers said they plan to increase their salary budgets by 3.9% next year. Proposed budgets tend to mirror actual increases quite closely in The Conference Board’s surveys.
Variability by Industry and Sector
Other recent surveys suggest much the same. A July report from the consulting firm Willis Towers Watson — which surveyed over 1,800 U.S. employers — found that companies are gearing up for a 3.9% increase in their salary budgets next year. Payscale’s findings were slightly more conservative, placing that figure at 3.5%.
Raise Distribution: Who’s Getting the Biggest Increases
Just because a company is adjusting its salary budgets by, say, 4% does not mean that every worker at the company is going to get a 4% raise. It simply means that the pot of money that the employer is allocating toward pay is getting larger. According to The Conference Board survey results, the industries with the largest increases to their salary budgets are communications (4.45%), insurance (4.35%), financial services (4.26%), and energy-agriculture (4.15%). On the other hand, utilities (3.31%) and banking (3.6%) companies have the lowest planned increases.
How Raises Are Used
The survey also provides some clues on how companies plan to use their bigger budgets. The largest share of the money is going toward merit raises for high-performing workers, as opposed to across-the-board raises. Additionally, about 40% of employers said they’re setting aside money for promotions in 2025, an increase from recent years.
Raise Strategies and Timing
In many cases, raises don’t come automatically. And if they do, the raise probably is lower than the amount you actually want. Career experts say that you will need to be proactive: ask for that raise.
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