After years of notable salary increases fuelled by a worker shortage and high inflation, American workers are set to receive more modest raises in 2024.
Companies are recalibrating their budgets to reflect the current and expected economic environment, and move toward a more sustainable model of compensation growth. Nevertheless, workers can still expect above-average increases compared with pre-pandemic times.
U.S. companies plan to increase salaries by 4% on average in 2024, according to Willis Towers Watson (WTW). That’s lower than the 2023 bump of 4.4%, but still well above the pre-pandemic level of 3%.
This modest adjustment is also a reflection of a slowly cooling job market and easing inflation, which are allowing companies to moderate their pay increases as they slow the pace of hiring. Notably, a majority of CEOs also expect the economic conditions to worsen this year, which could put further pressure on wages as job opportunities grow scarce and companies cut costs.
That said, this doesn’t mean workers should avoid pushing for higher wages. Although the labor market is cooling, it remains relatively tight, and business leaders are still under pressure to retain their employees through competitive salaries. Even if economic conditions worsen, it’s often more cost-effective for employers to issue raises than to hire and train new employees.
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