Here's Why Americans Can Expect a Small Pay Raise for 2014
NEW YORK (MainStreet) It may be tough to get a job, but perhaps even harder for the employed to get a raise in pay that outpaces inflation. Salary increases for U.S. workers have remained stuck in neutral at 2.9% this year, according to Aon Hewitt, but there is small hope for next year. A modest increase of 3% is projected the highest bump in pay since 2008, when salary increases were 3.7%. After accounting for inflation, salary increases are projected to increase from 1.1% this year to 1.7% next year.
It seems the wage increases have more to do with a lower cost of living than employer generosity.
"Due to ongoing economic challenges in many regions around the world, companies are remaining conservative with their compensation budgets," said Yanina Koliren, global compensation surveys and solutions leader at Aon Hewitt. "Salaries are increasing, but inflation plays a key factor in whether employees see an impact on their paychecks. This year, improved interest rates in multiple regions mean good news for many employees around the world."
Workers in Europe fare a bit better, with salary increases expected to reach 2.1% after factoring for inflation.
Aon Hewitt's Global Salary Increase Survey of more than 12,890 employers in 120 countries shows that when adjusted for inflation, average salary increases rose this year for all regions except Africa. While African workers garner the highest wage increases in the world, the result is still a net decrease in pay after the cost of living is considered.
For next year, salary increases for workers in Asia Pacific and Latin America are projected to be flat year to year, while workers in Africa and the Middle East will actually see a decrease in wages.
As companies continue to work their budgets for maximum efficiency, more organizations are leaning on variable-pay programs or performance-based awards that must be re-earned each year to attract, engage and reward high-performing employees. According to Aon Hewitt, 81% of companies around the world offered some form of variable pay program in 2013.
By Hal M. Bundrick for Main Street