With a tight labor market and the continuation of the Great Resignation, U.S. employers are planning to dole out bigger salary boosts in 2022, according to a survey released by Willis Towers Watson, a global professional services firm.
The survey, conducted between October and November of 2021, looked at 1,004 U.S. companies and found that nearly 1 in 3 respondents (32%) had bumped up original salary increase projections from June.
Companies were originally planning on giving employees a 3% salary boost, on average, but they have now increased it to 3.4%, the survey found. In comparison, employees working at the surveyed companies got a 2.8% salary bump in 2021, the survey found.
People on all levels are projected to get raises, from executives and management to support staff, production and manual labor positions, the survey found.
The largest salary increases are expected to appear in retail and wholesale trade, life and health insurance, finance, energy and industrial manufacturing, the survey found.
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The reason for these salary boosts? The labor shortage is a bigger factor than rising inflation, said Catherine Hartmann, North America rewards practice leader at Willis Towers Watson.
Employer concerns over the ability to hire and retain talent far outweighed other factors for boosting salary increases, with 74% of companies in the survey citing the tight labor market. “There’s a great reprioritization of work, rewards and careers underway, and it’s putting significant pressure on compensation programs for many employers,” Hartmann said in commentary accompanying the survey.
Adding to employers’ adversity: employees are indeed getting ready to quit in 2022, according to data from a December study by consumer finance company Credit Karma.
The study, which included more than 1,000 respondents, found that 45% of Americans plan to explore new job opportunities in 2022, and the top reason respondents listed was not getting paid enough.
However, nearly a quarter (22%) of respondents in the Credit Karma survey who were looking for a new job revealed that they were searching for better benefits as well.
“While companies are boosting salary budgets, bigger pay raises alone won’t be enough to help address their attraction and retention challenges,” said Lesli Jennings, senior director of work and rewards at Willis Towers Watson.
Sign-on bonuses, equity, cash retention and recognition enhancements can be used to attract and retain employees, Jennings said. Plus, an emphasis on mental well-being, focus on diversity, equity and inclusion and learning opportunities can complement increased pay, Jennings says.
Michelle Shen is a Money & Tech Digital Reporter for USA TODAY. You can reach her @michelle_shen10 on Twitter.