inflation

Pay raises are back, finally, but skimpy

December 18, 2012: 11:25 AM ET

Though they are smaller than they were pre-recession, hardly any employers are handing staffers a thank-you note or a box of chocolates instead of a pay increase.121218041144-pay-raise-measurement-gallery-horizontal

By Vickie Elmer

FORTUNE -- Finally, more than three years after the recession officially ended, salary raises are rolling in again.

Though they are smaller than they were pre-recession, hardly any employers are handing staffers a thank-you note or a box of chocolates instead of a pay increase. Employers also are no longer dragging their feet and waiting extra weeks to deliver these raises, according to research by nonprofit HR association WorldatWork.

This year, the average wait time between raises for U.S. workers has been 12.4 to 12.7 months and next year it is expected to be about the same, according to WorldatWork. This marks a major improvement from 2010, when employers waited an average 13.7 months to offer pay increases to their U.S. exempt salary workers. In the depths of the recession, 10% of employers held off for 36 months -- three years! -- before increasing their salary structures - pay scales that are the benchmarks for determining salaries -  and the average had inched up to 28 months, according to WorldatWork.

The planned timing between raises may be back on track, but that does not mean gains will be generous. Most U.S. workers will earn a raise of around 3%, though some star performers can expect more -- in some cases twice the rate of gain as the average worker a few cubicles away. To put this into perspective, the inflation rate in the U.S. in 2012 has ranged from 1.4% to 3%.

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In the United States, the attitude on raises is mostly, "Take it slow. Take it cautiously…. Let's hold back a little bit," says Kerry Chou, WorldatWork senior compensation practice leader. Amid all the global uncertainty, with problems in Europe, slower growth in China and elsewhere, and the U.S. fiscal debt woes, the short-term outlook for raises is "pretty modest, pretty cautious increases," he says.

Raises have inched up from a 39-year low of 2.2% in 2009 to a 3% gain this year as fewer companies have frozen their compensation budgets. Only 5% of the 2,150 U.S. employers WorldatWork surveyed said they expect to keep all salary levels steady, down from 33% in 2009. More

  • Recession? Inflation? Help is on the way!

    Why are we now required to read up on strategies for both recession and inflation? This seems unfair to me. I would like to be worried about only one economic armageddon at a time. I realize these things come in threes, though. Recession. Inflation. What's next?

    - Jun 23, 2008 10:40 AM ET
Anne Fisher

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