With no clear sign that the worker shortage is easing up, pay raises are making a comeback.
According to a recent survey by Willis Towers Watson, companies are projecting significantly higher raises across the board. They’re planning to boost the average salary of executives, management, professional employees, and support staff by 3% in 2022 compared to the average 2.7% increase they gave workers this year. Production and manual labor employees can also expect to see their pay climb by 2.8% on average in 2022, up from 2.5% in 2021.
“On the one hand, employers need to continually, effectively, [manage] their fixed costs as they rebound from the pandemic, but on the other hand, companies are starting to recognize that they do need to boost compensation,” Catherine Hartmann, managing director and North America rewards practice leader at Willis Towers Watson, told Yahoo Finance.
High-tech and pharmaceutical companies are budgeting the largest pay increases (3.1%) in 2022, with health care, media, and financial services companies coming in a close second (3%). Retail companies expect to give 2.9% increases to their employees, while leisure and hospitality as well as the oil and gas industries are projecting 2.4% raises in 2022. (About 500,000 hotel operations jobs lost during the pandemic in the U.S. will not have returned by the end of the year, according to a study from the American Hotel & Lodging Association.)
Amazon, Costco, and Target are among companies who raised wages for hourly workers in 2021. Asset management company BlackRock announced an even bigger bump – an 8% base pay increase for all employees effective in September.
“There’s real pressure on organizations to compete for qualified workers these days and so if we see this trend through the fall, it is possible that these industries with lower projected average increases like retail, like leisure and hospitality, may see their actual 2022 salary increases are at higher levels,” said Hartmann.
High performance ratings, unsurprisingly, translates to significant bumps in pay. Companies gave management and professional employees who received their top rating an average increase of 4.5% in 2021, 73% higher than the 2.6% raise given to workers who got average ratings, according to the survey.
For employees thinking of asking for a raise, Hartmann had three pieces of advice: “Number one, know your worth, know what is the market value for the role you hold and what is the competitive rate. The second is, understand your performance accomplishments” as an individual and to the company as a whole, she said. “The third [is] be very fact-based. Leave your ego and leave your emotions at the door. Now really is a good time to self-advocate.”
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