NEW YORK -- A rebounding economy and improving job market
aren't translating into big pay raises for U.S. workers,
who'll get an average 3.6
percent increase this year.
Some workers, though, might find something extra in their
paychecks if their bosses are really pleased with their
Results of a survey released
Tuesday by Mercer Human Resource Consulting show the size of
the average raise this year is little changed from
2004, when pay hikes averaged 3.5
But the increases are generally helping workers stay ahead
of inflation, which has risen at annual rate of 3.1
percent so far this year.
A separate survey issued last
month by the Conference Board was in line with
Mercer's, finding that salaries are expected to rise an
average 3.5 percent.
folks seem to think 3.5 - 3.6 percent is a small
raise. I bet none of them work hourly jobs for
International Paper. I wonder why none of
these national surveys were looked at when our raise
This is the third straight year that employers are granting
raises under the 4 percent-plus level common in the 1990s,
but many individual workers are actually doing better
because the use of one-time compensation such as bonuses has
increased, said Steven Gross, a senior consultant at Mercer
who specializes in looking at employee compensation.
"This is not bad news, this is good news." Gross
said. "In aggregate, employers are providing more
compensation, it's just not directly in base pay."
With employers under pressure to hold down their fixed
costs, many are reluctant to increase base pay and are more
likely to use bonuses and other one-time rewards. Mercer
said 86 percent of its survey respondents reported they used
some kind of short-term incentive in 2005.
The survey included nearly 1,350 employers across the
country and reflects pay practices for nearly 13 million
this talk about incentives, bonus checks and
more compensation leads me to believe that some of
these people got more than a $600
Signing bonuses have become increasingly popular as
companies try to compensate for lower raises and attract
talented employees. Fifty-five percent of survey respondents
said they gave out signing bonuses during 2005.
This trend is most apparent in the information technology
companies, where 65 percent of the respondents said they
offered signing bonuses this year. They were also common in
accounting and finance companies, where 46 percent said they
granted such bonuses, and in engineering, where 38 percent
of respondents gave them.
Spot cash awards were also popular in 2005, with information
technology companies again the most likely to use this form
Looking ahead to 2006, Mercer found employers were likely to
continue using spot rewards and bonuses while the average
expected pay raise rate remains constant at 3.6 percent.
Among the five categories Mercer divides employees into,
management employees and technical/professional employees on
average received a 3.6 percent pay increase in 2005, and are
expected to receive the same in 2006. Nonexempt
clerical/technician employees, who hold positions such as
secretaries and lab technicians, are receiving an average of
3.5 percent raises this year and can expect 3.6 percent next
Non-union hourly employees
are seeing average raises of 3.4 percent and are likely to
see 3.5 percent increases next year.
The pay raise rate for executive employees, on the other
hand, is expected to decline from an average 3.9 percent in
2005 to 3.8 percent in 2006.
Average 3.6 raises and bonus checks? Non-Union
employees getting 3.4 to 3.5 percent raises?
Executive raises on the decline? I know this can't
be International Paper these people are talking
about. IP loves to lavish bonus checks on
their executives and starve their non union
employees in the
While the overall pay raise rate will remain constant, the
good news for employees is that there appears to be a halt
in salary freezes. Dramatically down from 16 percent in
2002, only 2 percent of employers reported salary freezes in
2005. In 2004, five percent of employers reported salary
Employers providing compensation through stock options
declined to 31 percent this year, down from its peak of 37
percent in 2002. The decline is expected to continue with
only 1.4 percent of survey respondents considering stock
options as compensation for the first time.
Gross said the drop in stock options is the result of
changing accounting methods that have made the once free
commodity too expensive for companies to continue using.