Workers primarily in lower-wage sectors had more opportunities to quit for a higher-paying job. People who changed jobs saw average wage growth of 6.6% in September.
New York: Americans are in line for their biggest wage increase in more than a decade. According to a report, businesses are expected to boost employees’ paychecks by 3.9 per cent, signaling the fastest wage growth since 2008. While some of the biggest pay hikes have gone to people who changed jobs this year, the 3.9 per cent salary increase budgets will go to existing employees in 2022. Almost half of companies from the survey said they’re planning raises for current employees to keep pace with higher pay they’ve awarded new hires.
The report released by the think tank, The Conference Board, asked employers as to how much they projected their wage costs to increase in 2022 for their current workforce. While 46 per cent of employers cited the need to offer higher wages to new employees, 39 per cent said that increased inflation figures played a factor. However, the increase does not include bonuses or one-time compensation payouts. “The big jump was for executives, for regular employees, and for hourly employees,” Gad Levanon, vice president for labor markets at The Conference Board, was quoted in the Washington Post.
Changing job saw more wage growth
Workers primarily in lower-wage sectors suddenly had more opportunities to quit for a higher-paying job. People who changed jobs saw average wage growth of 6.6% in September, up from 5.1% in the first half of the year, according to the payroll company ADP.
As of October, there were 11 million open roles, 6.5 million workers were hired, and 4.2 million people quit their job. The “dramatic” gap between job openings and new hires, as well as sky-high turnover, shows that employers are having a hard time filling open roles quickly, Levanon was quoted in a cnbc report.
But when new hires see faster wage growth than current employees, it can lead to wage compression, or when people feel their experience is no longer valued, and they could seek their pay bump elsewhere.
What to expect in 2022
The report said that the momentum for rising salary budgets will be strong in the coming months as the labor market continues to favor worker demands over employer hiring needs.
Some companies may have to revise their planned raises even higher. “Now, they will see what other companies are doing, and that may incentivize raised salaries even more,” Levanon said, adding“I expect if we do this survey again in three to four months, we’ll get even higher numbers.”
Union wages, meanwhile, are tied to long-term contracts and could adjust upward in the next year or two, he adds.
