US companies plan to give employees larger raises next year than this year, according to a new survey by Willis Towers Watson.
Companies surveyed projected average salary increases of 3.0% for executives, management and professional employees, and support staff in 2022. That’s up from the average 2.7% increases this year.
The average increase for production and manual labor employees next year is 2.8%, higher than the 2.5% average increase this year.
Willis Towers Watson noted salary increases hovered around 3.0% for the past decade until the pandemic caused companies to trim budgets. The larger raises coincide with a surge in demand for labor and a shortage of supply of hourly workers and specific professional roles.
“Companies are between a rock and a hard place when it comes to compensation planning,” said Catherine Hartmann, North America Rewards practice leader at Willis Towers Watson.
“On the one hand, employers need to continue effectively managing fixed costs as they rebound from the pandemic. On the other hand, companies recognize they need to boost compensation with sign-on, referral and retention bonuses; skill premiums; midyear adjustments; or pay raises,” Hartmann said. “Or they can utilize all of these options, especially with millions of Americans quitting their jobs, changing careers or postponing looking for employment.”
Among the major industry groups, high-tech and pharmaceutical companies project the largest increases at 3.1% next year followed by healthcare, media and financial services companies at 3.0%. On the other hand, oil and gas industry companies, as well as leisure and hospitality industry companies, are budgeting significantly lower salary increases for employees at 2.4%. Retail industry companies are projecting average raises of 2.9% next year.
The survey included 1,220 companies representing a cross section of industries. It took place between April and June.