Modest raises on the way for American workers in 2012

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Two recent surveys say employers expect to hand out modest pay raises next year.

Did we expect a windfall?

Probably not, given the current economic doldrums.

A survey of 773 U.S. companies by Towers Watson, a global professional services company, indicates that companies are planning pay increases averaging 2.8% in 2012 for salaried, nonexecutive employees.

That's slightly more than the 2.6% they were expected to get this year.

Executives and nonexempt employees can expect similar raises, according to Towers Watson.

“Until the economy shows some solid and consistent improvement, most companies are keeping their salary budgets relatively tight,” says Laura Sejen, the company's Rewards Global Practice Leader.

A similar survey by consulting firm Mercer says workers could see a base pay increase of 3% next year, about the same as the 2.9% increase projected for this year.

But top performers stand to reap the biggest wage increases, both surveys indicate, because retaining them is key for companies as the U.S. economy struggles to regain its footing.

Towers Watson's survey found that workers who get the highest performance ratings are seeing a median salary increase of 4.5% this year, while wages for below-average performers are rising only 1.4%.

Mercer's survey showed top performers are getting average base pay increases of 4.4% this year, compared with 2.8% for average performers and 0.4% for the poorest performers.

"The risk of losing key employees weighs heavily on employers as their compensation budgets remain flat," says Catherine Hartmann, a principal with Mercer's Rewards consulting business.

Mercer surveyed 1,200 large and midsized employers representing 12 million workers for the annual survey, which has been done for more than 20 years.

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