If you were hoping for a big pay bump next year, you might not be in luck. Employers are planning to increase salaries on average by a smaller amount next year than they did in 2023.
This comes at an inopportune time for many Americans, as the cost of living seems to only be going up.
Wage Growth Data
In 2023, the average salary increased by 4.4%, according to consulting firm Willis Towers Watson (WTW). But for next year, it’s forecast to grow just 4%. That doesn’t sound like a big difference, but don’t forget that we’re talking in averages here.
Indeed’s wage forecaster also showed that year-over-year growth in posted wages is trending downward. In August 2023, wage growth was 4.5%, still up from pre-pandemic rates, but down from a high of 9.3% in January 2022.
The Race Against Inflation
So what if wages grow a little bit slower after the pandemic-era jobs bonanza? Enter inflation.
Inflation has outpaced wage growth since 2021. Since the start of 2020, the cost of living rose 18.3%, compared to a 17.6% increase for wages. This has resulted in negative nominal wage growth for the average American. In other words, your paycheck simply isn’t going as far.
With wage growth set to continue slowing in 2024, Americans will need to be extra careful not to overspend their budget.
Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.