US salary budgets expected to remain the same in 2025
Rhea-AI Summary
WTW's Salary Budget Planning Report reveals that U.S. salary increase budgets are projected to remain stable at 3.7% in 2025, compared to 3.8% in 2024, still above the pre-pandemic norm of 3%. The average increase in total payroll was 5.5% in 2024.
Companies reducing salary budgets cite weaker financial results (36%) and cost management (34%) as main reasons, while those increasing budgets point to inflation (39%) and labor market concerns (31%). Employee attraction and retention difficulties decreased to 36%, down 9 percentage points from last year.
Organizations are focusing on workplace improvements, with 54% emphasizing DEI, 53% enhancing employee experience, and 52% offering flexible work arrangements.
Positive
- Salary increases remain above pre-pandemic levels at 3.7%
- Total payroll expenses showed strong growth at 5.5% in 2024
- Employee attraction and retention challenges decreased by 9 percentage points
Negative
- Salary increase budgets projected to slightly decrease from 3.8% to 3.7%
- 36% of companies cite weaker financial results as reason for reducing salary budgets
- 34% report cost management concerns affecting salary decisions
News Market Reaction – WTW
On the day this news was published, WTW declined 0.96%, reflecting a mild negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
Despite today’s tight labor market and relatively low unemployment, organizations hold firm on pay raises
NEW YORK, Dec. 18, 2024 (GLOBE NEWSWIRE) -- Although fewer organizations report difficulty with attraction and retention, salary increase budgets at U.S. companies are projected to remain at the same level as last year. While salary increase budgets are stabilizing, with 2025 planned increases projected to be
Despite a conservative outlook for 2025, salary increases remain at a healthy rate by historic standards and amid higher total payroll expenses (which include salaries, bonuses, variable pay and benefit costs). According to WTW’s survey findings, the average increase in payroll for respondents was
For those companies planning to reduce salary increase budgets, weaker financial results (
Steady and improved pay increases are indicative of organizations’ investment in talent. Overall, fewer organizations (
“Although salary is crucial for employees, other elements — such as healthcare and retirement benefits, new challenges, work flexibility and meaningful contributions — are significant as well. Companies should consistently evaluate their comprehensive offerings, focusing on workplace culture, communication, and a holistic approach to benefits and rewards,” stated Russ Wakelin, head of Global Product Development within Rewards Data Intelligence at WTW.
As organizations focus on their workforces, many have taken action to improve workplace culture in light of the current market conditions. For instance, more than half (
“The U.S. labor market has stabilized because demand for talent dropped significantly from the prior three years. But supply has not changed, which is why the labor market still has vulnerabilities. Employers planning to lower salary increases closer to the
About the survey
The Salary Budget Planning Report is compiled by WTW’s Rewards Data Intelligence practice. The survey was conducted between September and the end of October 2024. Over 37,000 responses were received from companies across over 150 countries worldwide. In the U.S. 2,002 organizations responded.
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.
Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you. Learn more at wtwco.com.
Media contacts:
Ileana Feoli
ileana.feoli@wtwco.com
Stacy Bronstein
stacy.bronstein@wtwco.com
