HR Leads Business

Aug 30, 2018 | Barry Lawrence, MBA, aPHR, HRCI Staff Writer

Employers Predict Only Slight Pay Increases for 2019

U.S. workers will see pay increases in 2019, but bumps in salary will be slight.

Both exempt and non-exempt employees will see pay increases of about 3 percent, according to a survey from Willis Towers Watson Data Services. The same 3-percent increases are expected for managers and executives.

2019 pay increase projections from Mercer show similar results.  Yearly pay increases have averaged 2.8 percent from 2015 to 2018 — and Mercer forecasts an average pay increase of 2.9 percent in 2019.

The small increase, however, shows that companies are "feeling pressure to boost salaries" after a decade of flat pay raises, Towers Watson says.

“A growing number of companies are coming to grips with the fact that employees are more willing to change companies to advance their careers and to talk openly about their pay. As a result, organizations are facing increased pressure entering next year to devise a focused strategy and plan on how to allocate their precious compensation dollars or risk losing some of their best talent."

Little Salary Impact From Trump Tax Cuts

The Tax Cuts and Jobs Act does not appear to be having much impact on pay raises, Mercer adds:

  • Only 4 percent say they are planning to redirect tax savings into their salary increase budget for 2019.
  • 68 percent of companies said they are NOT redirecting savings into salary increase budgets.
  • 28 percent do not anticipate any tax savings.

2019 is likely to be a challenging year for employers, following mid-term elections and continued focus on pay equity and fair treatment in the workplace from movements such as TIME’S UP and #MeToo.

Workers will continue to grumble, pinched by a decade of flat salary increases that are not keeping up with rising inflation and rising health care costs. In a tight labor market, companies must continue to be creative with pay, incentives and total rewards — especially for high performers and employees with in-demand skills.

Top HR challenges will remain attracting and retaining top talent in 2019 — as well creating best-in-class workforce cultures and high-performance teams.