Even with the current wave of COVID-19 hitting the country hard, employers are reporting they are planning to increase their salary budgets for 2022 over what they have done in years past. Labor is usually the highest expense an organization has, so it is crucial to take the time to determine your pay budget and if planned properly, pay increases can be a tool to help engage, motivate, and retain top talent.
According to the preliminary results of Employers Council Planning Packet Survey (final results will publish later this month), 560 organizations across Arizona, Colorado, Utah and Wyoming, report an average salary increase for 2022 of 3.3% up, from 2.1 % in 2021. This is expected across all employment categories.
After dipping in 2020 because of the COVID-19 pandemic, total salary increase budgets in the United States beat projections and rose to 3% in 2021, according to WorldatWork’s 2021-2022 Salary Budget Survey. The Survey reports that average salary increase budgets are projected to grow beyond pre-pandemic levels to 3.3% in 2022.
According to a recent survey by Willis Towers Watson, U.S. companies project average salary increases of 3.0% for executives, management and professional employees, and support staff in 2022. This is up from the average 2.7% increases that companies awarded employees in 2021.
This data signals continued economic recovery and an increasingly tight labor market. Employers should know what other companies are budgeting for salary increases by consulting the survey data, but simply looking at the survey data and setting your increased budget is not enough. Ultimately employers need to ensure that their employees’ compensation is aligned with their organization’s competitive positioning; however, this is defined by their organization. If you are paying your employees below the market, having difficulty recruiting and retaining employees, providing a 3.0% increase to someone’s pay will not likely put you in a better position to compete for talent.
Be fiscally responsible. Understand the health of your organization and know what your organization can afford. Spend the time now to determine the right budget. If you don’t, you could be responding to employee relations issues and recruiting and retention challenges. Contact us with questions; Employers Council can help.