The U.S. Census Bureau defines median income as “the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount.” As companies continue to focus on retaining top talent, wages in the U.S. continue to grow slightly. “These salary increase projections reflect cautious optimism as the US economy gets healthier and unemployment rates continue to decline,” said Tom McMullen, Hay Group’s North American Reward Practice Leader, in a recent Business Wire press release.
History of US Wage Increases
From 2000 to 2008, wages in the U.S. grew between 3.8 percent and 4.4 percent, but starting in 2009 slowed to below 3 percent. In 2012, the wages grew 2.8 percent and 2.9 percent in 2013. Employees were not able to purchase more with that additional income, as consumer prices have risen 1.7 percent, based on the Labor Department's Consumer Price Index.
2014 Pay Increase
In 2014, base pay increases are projected to average 3 percent across industries and positions, with increased pay differentiation for high performers, say new forecasts by WorldatWork, Mercer, Hay Group and others. The projections show that the top 7 percent of the workforce can expect an increase of 4.6 percent in 2014. “In an improved economy top performers continue to get salary increases nearly twice that of an average performer, which indicates that pay for performance is alive and well in the annual merit process,” stated Catherine Hartmann, a principal in Mercer's rewards consulting business, in a recent Mercer study press release.
Increases Over Industries and Positions
The 3 percent median base salary increase is consistent across most industries, including chemical, consumer products, financial services, health insurance, hospitals and utilities. It is expected that one industry will manage an increase above the national median. Employees in the oil and gas sector can expect a median pay increase of 4 percent in 2014. Hay Group's research also showed that the projected median pay increases of 3 percent were consistent across the board for executives, middle management, supervisory and clerical positions.
Incentives and Bonuses
As the economy continues to improve employers are choosing to stay away from general salary increases, in favor of merit increases in the form of incentives and bonuses. The benefit of offering merit increases is employers have more control over distributing the increase based on individual’s contribution and the company’s performance throughout the year. In addition, companies are seeking nonmonetary rewards as a means to improve employee engagement and lead to increased retention.
- The United States Census Bureau; Income; Frequently Asked Questions
- The Wall Street Journal; Business Wire; Forecasted 2014 US Base Salary Increases Remain Stable, While Employees See Net Gains, New Hay Group Research Finds
- World At Work; Salary Budget Survey; April 2013
- The Bureau of Labor Statistics; Consumer Price Index Summary
- Mercer, Pay increases for US employees illustrate the “new normal” by staying the course
- Polka Dot Images/Polka Dot/Getty Images