Average Pay Increase in 2014 Projected at 2.8%, Up From 2.7% in 2013

Amy Kaminski of Compdata Surveys

The average pay increase budget projected for organizations in 2014 is 2.8 percent, up slightly from 2.7 percent reported for 2013, according to Compdata Surveys’ national survey of 40,000 U.S. employers. More than 80 percent of participating organizations indicated having a formal pay range in place, and the average pay range adjustment reported in 2013 was 2.1 percent. This is up slightly from 1.9 percent last year and 1.7 percent in 2011. Organizations expect almost no change for 2014, reporting projected adjustments of 2 percent.

Pay increase budget projections for 2014 vary by industry. Employers in the banking and finance, hospitality, manufacturing and distribution, and utilities industries expect a pay increase budget of 2.9 percent next year. In comparison, healthcare organizations projected a 2.5 percent pay increase budget, and not-for-profit organizations expect 2.4 percent. Insurance employers projected the highest budget for 2014 at 3 percent.

Pay range adjustments also vary by industry as employers in utilities reported adjustments of 2.2 percent. Not-for-profit and hospitality organizations reported pay range adjustments of 1.9 percent, and manufacturers and distributors indicated a 2.3 percent adjustment to pay ranges. Banking and finance organizations reported the highest adjustment amount for 2013 at 2.4 percent, while healthcare reported the lowest at 1.8 percent.

“Employers are remaining cautious when it comes to compensation, and that is clearly indicated in the slow rate of growth in pay range adjustments,” said Amy Kaminski, vice president for Compdata Surveys. “However, now is the time organizations must re-evaluate pay programs to ensure they’ll be able to retain valuable talent amid predictions of a more mobile workforce.”

As a reflection of this cautious attitude, more than 76 percent of employers withhold increases if an employee is over their established pay range maximum. Industries differ in their rate of use of this technique as 85.3 percent of healthcare employers withhold increases, compared to 70.4 percent of manufacturing and distribution organizations. Comparatively, 69 percent of employers grant lump sum increases to employees who have exceeded their established pay range.