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In a response to a tight labor market and record-high inflation, employers plan to raise salaries 4.1% in 2023, according to Willis Towers Watson’s (WTW) Salary Budget Planning Report. These increases will be the largest since 2008 and 64% of employers have budgeted for higher pay raises than last year.
Inflation is having a direct impact on employees. Four in ten workers live paycheck to paycheck, according to another WTW survey, and this often applies to even high-salaried workers. For example, full-time faculty wages decreased by 5% in 2022 after adjusting for inflation, according to the American Association of University Professors’ annual report. Thus, creating the need for many organizations to increase wages.
Some employers are even going beyond salary increases, introducing inflation-offset bonuses or making changes to their current compensation programs to require more frequent salary reviews.
Employers should continue to monitor labor, inflation, and compensation trends. The employment landscape is continuously changing as workers deal with the realities of the current economic climate. Download the bulletin for more details.
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