Pay Freeze Update – Where Are They a Year Later?

In last year’s July/August issue of Workplace Matters magazine, we reported historical data on pay freezes from our Colorado Benchmark Compensation Survey. After we published our 2014 edition of the survey, I wondered if the number of organizations reporting pay freezes had gone down from last year. The survey defines a “pay freeze” as no increase given to an employee’s base salary.

I have good news to report! In the 2013 survey, 13 percent of Colorado organizations projected a pay freeze in 2013 and 12 percent of organizations in 2014. In this year’s survey, only 10 percent of organizations reported a pay freeze in 2013, down 3 percent from what they reported last year. In addition, only 8 percent of organizations are projecting a pay freeze in 2014, and just 7 percent in 2015.

This chart looks back at 20 years of pay freezes reported by employers in the annual Colorado Benchmark Compensation Survey. As you can see, we are finally down to single digits of organizations reporting pay freezes. We are also getting closer to pre-recessionary figures of 5 percent during the period of 2005-2007.

Historical Pay Freeze

Pay freezes can also equate to lower average pay increases for employees receiving an increase. The average projected pay increases are getting higher now with fewer organizations reporting pay freezes. The pay increase projections for 2014 in Northern Colorado and Resort areas are 3.1 percent. Northern Colorado is also projecting a 3.1 percent pay increase in 2015. This is the first time since the recession we have reported an
average pay increase over 3 percent in any of the Colorado geographic areas surveyed!

If we remove pay freezes from the 2015 averages, the average pay increases for All Colorado is 3.0 percent. Still not as high as the average pay increases received during 2005-2007 at 3.5 percent, but getting larger each year.

It is nice to see the trend of fewer organizations projecting pay freezes and average projected pay increases higher than previous years. Maybe in the 2015 edition of the survey we will be back to pre-recessionary figures of 5.0 percent for pay freezes and 3.0 percent or greater for pay increases. Stayed tuned to see what happens with pay freezes and increases when we publish the Fall Planning Packet Survey in September 2014.