Employers are forecasting an average increase in salary budgets of about 3.5% to 4% for the upcoming year, marking a slight decline from recent highs during the pandemic but still surpassing the pre-pandemic average of 3%. Dana M. Peterson, the chief economist at The Conference Board, anticipates that elevated wages will persist into 2025 despite a slower pace of hiring and minor upticks in unemployment.
The latest salary budget report from The Conference Board, based on a survey of 300 private-sector companies, reveals an average planned increase of 3.9% for the next year. Historically, proposed budget adjustments closely align with actual salary increases, as evidenced by previous survey results indicating a 4.1% proposal for 2024 and a subsequent 3.8% actual raise.
Similarly, surveys conducted by other organizations echo these findings. Willis Towers Watson surveyed over 1,800 U.S. employers and projects a 3.9% increase in salary budgets for the upcoming year, while Payscale estimates a slightly more conservative figure at 3.5%. All indicators point towards salary raises in 2025 exceeding pre-pandemic norms.
Identifying the Recipients of Significant Raises in 2025
A company’s decision to adjust its salary budget by a certain percentage does not guarantee each employee will receive an equivalent raise. Various factors influence individual pay adjustments, such as industry, customary annual raises, cost-of-living adjustments, promotions, and performance reviews.
According to The Conference Board survey, industries with the most substantial increases in salary budgets include communications (4.45%), insurance (4.35%), financial services (4.26%), and energy-agriculture (4.15%). Conversely, utilities (3.31%) and banking (3.6%) companies anticipate lower raises. The survey also reveals that a significant portion of the increased budget will be allocated to merit raises for high-performing employees, rather than across-the-board raises.
Furthermore, approximately 40% of employers are earmarking funds for promotions in 2025, indicating a shift from previous years. It’s important to note that these statistics pertain to the private sector, as governmental employees follow a different protocol for salary adjustments. For instance, federal workers await President Joe Biden’s approval on a proposed 2% raise, despite calls from federal unions for a more substantial increase.
Tips for Securing the Raise You Deserve
Raises are not always automatic and may not meet your expectations. Career experts recommend taking a proactive approach by initiating a conversation about a raise rather than waiting for your employer to broach the subject.
Prepare a comprehensive list of your achievements since your last raise and emphasize why you deserve the increase. While referencing inflation rates can strengthen your case, focus primarily on showcasing your individual value to the company. Persistence is key: schedule meetings, follow up, and clearly articulate your reasons for deserving a raise.
Remember, when it comes to money, proactive communication is vital. Waiting for a raise to materialize on its own is unlikely. Take charge of your financial growth by advocating for yourself and demonstrating your worth to your employer.
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