Economy means lowest raise in 32 years
American workers can expect barely-there pay raises in the coming year, with employers reacting to the recession by cutting costs. CNN reports that a newly-published study by Hewitt Associates has found that of 640 large companies surveyed, 50% report plans to reduce labor costs. Twenty-five percent of employers reported considering cuts.The businesses surveyed represent upwards of 13.5 million workers. The reduction in raises could therefore affect 7 to 10 million employees.
After reductions, raises are expected to come in at less than 3%. This is the lowest in the 32 year history of the survey. Raise projections from July estimated 2009 raises would approach 4%; current estimates are closer to 2.5%.
The survey includes information about specific industries whose raises will be especially small: the automotive industry (1.4%), education (2.3%), and finance (2.9%). Industries bucking the trend and projecting larger raises include construction and engineering (4.5%), research (4%), and pharmaceuticals (3.9%).
With across-the-board raises looking so dismal, performance-based rewards and bonuses are already operating or are being implemented by 93% of the companies surveyed.
That is not to say that these incentive-based pay programs will not see cuts as well. Survey findings indicate that these programs will fall to 11.1% of payrolls for salaried exempt employees from a projected 12.1% in July (5.7% from 6.1% for non-exempt employees).
Tags: consumer news, economic news, recession, workers
