Will You Get the Raise You Deserve This Year?


Employers expect the average raise in 2014 to be 2.9 percent of base pay, according to a recent survey by consultancy firm Mercer. This increase would follow an average raise of 2.8 percent in 2013 and 2.7 percent in 2012 and 2011. The news is a boon for workers who have experienced nearly stagnant personal income growth in the post-recession era, and a welcome break for the 3.7 percent of employees who were subject to frozen salaries in 2013, down from 6.5 percent in 2012.

However, at 2.9 percent the expected average raise in 2014 is still more than half a percentage point below the average raise in the mid-2000s. Higher unemployment means more competition for any given job opening. A recent report from the Economic Policy Institute showed that there are 3.1 job seekers for every open position. The ratio has been 3-to-1 or greater since October 2008. The EPI said, “A job-seekers ratio above 3-to-1 means there are no jobs for more than two out of three unemployed workers,” and that the job-seekers ratio in a healthy economy would be close to 1-to-1.

All this competition for employment has put some downward pressure on wages. Employers know they don’t need to stretch too far to fill the average position, and can usually find competent employees willing to work for less.


The overall headline unemployment rate has come down from highs of 10 percent during the recession, but job growth remains underwhelming at best. Headline unemployment sits at 7.6 percent, and many of the nearly 200,000 jobs being added each month are at the low end of the wage scale.

But with this in mind, Mercer would be quick to point out that the data only really hold true at the middle and lower-end of the performance spectrum. The demand for highly skilled workers and top-tier talent has increased over the past few years. Jeani Adkins, a partner at Mercer, commented in the survey that “employers recognize that their greatest challenge is to retain their top performers…This means they have to reward and recognize them.

“This includes providing higher pay increases along with other non-cash rewards such as training opportunities and career development,” Adkins continued. To get an idea of how employers are trying to hold on to top-tier talent, here’s a breakdown from Mercer’s report.

Mercer2“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,” said Catherine Hartmann, a principal in Mercer’s rewards consulting business. “Differentiation of salary increases based on performance is now commonplace and remains an effective way for employers to recognize those employees that enhance the company’s competitiveness and contribute to its success.”

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