(Trends Wide Business) — If you have a job in the United States, you will probably get a big pay raise next year.
Base salary may increase by an average of 3.9% in 2022, the largest projected increase in a year since 2008, according to The Conference Board’s latest salary survey of 240 companies, most of which employ more than 10,000 persons.
Employers were asked how much they projected their wage costs would increase in 2022 for their current workforce. Therefore, the 3.9% increase does not include any bonuses or other one-time payments that a business may offer.
The reason for the increase
Why the big increase? Almost half (46%) of employers mentioned the need to offer higher wages to attract workers given the labor shortage.
As employers offer new hires higher wages, there is a “salary compression,” the Conference Board said. That means narrowing the gap in pay between new hires and current incumbents or higher-ranking employees.
“When more experienced workers feel that their salary advantage is no longer significant, they can seek new jobs in the tight labor market, leading to high job turnover of more experienced workers,” noted the Conference Board.
And 39% of employers cited high inflation as another factor. While inflation is not typically the main reason for employers to raise base pay, this year has been too high to ignore, and companies worry that some of their employees will jump ship if they don’t get enough pay increases, he said. Gad Levanon, Vice President of The Conference Board whose research focuses on labor markets.
In fact, employers’ thinking about wage growth has changed rapidly over the past year. In April, when the labor shortage was not as pronounced and high inflation was not yet considered persistent, they were asked the same questions about projected wage cost increases for 2022. Back then, they estimated those costs would rise only 3%.
You may see an even bigger increase in your base salary if you search for a new job and return to your company with a competitive offer. Or you may just accept the new offer.
“People who change jobs get much higher wage growth than people who stay in the same jobs,” Levanon said.