2022 Salary Increases
In 2022, companies are planning to hand out the most extensive raises the nation has seen in over a decade.
Reasons for Wage Increase
The American population are awaiting their biggest wage increase in more than a decade, according to a report released on Wednesday by the Bureau of Labor Statistics. As companies continue to struggle against a tight labor market and high inflation. Many businesses are anticipated to bump up pay by an average of 3.9 percent in 2022, nearly a whole point higher than last year (3.0%) according to the Conference Board report. That’s the fastest wage growth in over a decade (2008). Businesses aren’t letting people go due to the talent deficiency in the candidate pool, instead, they’re giving current employees raises as an incentive to stay. Also, higher pay for new hires was the most commonly noted reason for the upswing, suggesting labor shortages and high turnover across the nation could be giving employees more leverage. Inflation, which is at an all time high in nearly 30 years, was the second most commonly noted factor.
In past years, an employer could award raises of 2 – 3 percent and maintain a steady pace with inflation. This unfortunately is no longer the case: HR and employers now find they have to offer more benefits, pay, PTO, healthcare, etc. to attract the job candidates they need, especially for highly specific in demand technical skills. More and more employees are leaving their job and companies now see inflation as something they’re going to deal with for the coming years. If you merge that with the Great Resignation, plus a heavy focus on technology related skills, that’s where a lot of budget planning increases are spawning. Glassdoor economist Daniel Zhao says it’s a “very common phenomenon” for these job-hoppers to have a leg-up in an altering labor market. “Often, workers who stay in their current jobs see slower pay growth because employers don’t feel as much pressure to raise wages for them. There’s a certain amount of inertia when employers think about paying their existing employees.” So, companies are now paying extra to keep their current employees even if their position is not worth the salary they are receiving.
What to Expect in 2022
Momentum for rising salary budgets will continue to be threatening in the coming months as the labor market continues to work in favor of worker demands over employer hiring needs. Some companies may need to revise their planned raises even higher. A lot of companies decided on their 2022 raises a few months ago before employers had a clear picture of how rising wages for new hires, as well as inflation, would severely impact the labor market. Now, employers will see what other companies are doing, and that may incentivize raised salaries even more. Union wages, however, are tied to long-term contracts and could adjust upward in the next year or two. Salary predictions for 2022 are volatile and rely heavily on the incoming candidates to the workforce.
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