*copied from SHRM October 2, 2024
Employers may be cautious about pay due to economic concerns, but they are planning to stay consistent with salaries next year—at least for now.
On average, U.S. employers are budgeting for 3.3% merit increases and 3.6% increases for their total salary budgets for nonunionized employees, according to new data from consulting firm Mercer, which surveyed more than 1,100 employers to gauge what pay will look like in 2025. These numbers are the same as the actual pay increases that employers delivered in 2024.
Mercer’s analysis also found that, in addition to remaining consistent with salary increases, employers are planning to promote just under 10% of their employees in 2025. For companies with a separate promotion budget, the average promotion increase budget for 2025 is 1%, down slightly from 1.1% in 2024.
Although labor reports indicate the job market is still competitive, employers are cautious over a recession and other economic concerns that have caused them to pump the brakes on the aggressive pay bumps many employees have experienced over the past several years.
“Historical trends suggest a decline is likely in the months ahead, signaling a potential end of the elevated budgets we’ve seen over the past three years,” said Lauren Mason, Mercer’s U.S. workforce solutions leader. In light of these lower salary hikes, many organizations are looking at nonmonetary rewards to attract and retain employees. Many companies have permanently adopted hybrid and more flexible remote work policies and motivational engagement programs, where greater flexibility and worker satisfaction is projected.
