Wage increases may be slightly more difficult to obtain in 2024. The labor market has seen some slowdown recently: although unemployment is still low, job creation is slowing. And employers could tighten their purse strings.
According to December 2023 data from Mercer QuickPulseTM – US Compensation Planning Survey, U.S. employers plan to increase their salary increase budgets by an average of 3.8% for total compensation increases and 3.5% for merit increases. The average budget for total compensation increases is down slightly from 3.9% at the start of the year. However, there might be a better chance of getting a pay rise in some sectors and for those being promoted.
What does this mean for your salary increase in 2024? Let's look at some surprising statistics about today's pay raise landscape and how you can increase your salary and improve your personal finances.
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The Mercer survey found that employers plan to promote about 10% of the total workforce in 2024. Half of employers have a typical salary budget or spending process that they use to cover salary increases linked to promotions.
What this means for your salary increase in 2024: Being promoted is not a rare, impossible, unheard of event! Many people work hard every day and deserve a chance to advance. About 1 in 10 workers nationally can expect a promotion in 2024, and 50% of employers have already budgeted for promotions. Don't assume that your company “can't afford” to promote you or give you a raise; It's part of the cost of doing business, and companies plan for it.
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According to the Mercer survey, the average salary increase for a one-level promotion should be 9.2%. So, for example, if your current salary is $60,000 per year and you get an average promotion, you should expect your new salary after the promotion (and salary increase) to be around 65 $520.
What this means for your salary increase in 2024: If you've taken on additional responsibilities, filled in for absent colleagues, and generally kept things together at your company, 2024 might be a good time to ask your manager for a promotion. Ask for a bigger pay raise, a new job title, and the other benefits of moving up in the company. Remember: 9.2% is just the average salary increase for a promotion. Some people might get a lot more than that.
3. 50% of employers planned off-cycle salary increases in 2023
During a typical year as an employee, in many companies and organizations, you receive an annual performance review and an annual salary increase. Your salary increase will depend on your job performance, that of your employer, the state of the global economy and your industry, your department's budget, and much more.
But when the job market is strong, as it has been in 2022 and 2023, companies become nervous about losing good people to other employers. And they might be more likely to offer “off-cycle” salary increases, that is, salary increases that occur outside of the usual annual review time frame. The Mercer survey found that about 50% of employers plan to give (or have already given) off-cycle pay raises in 2023. Here are the top reasons employers are giving off-cycle pay raises.
Employers care about pay equity and making sure they're paying people within the company fairly – not accidentally (or as an act of potentially illegal discrimination) by underpaying teams or individuals. Sometimes, off-cycle pay increases take place within organizations to help rebalance the scales and provide fairer pay for everyone.
As the job market evolves, certain employees and skills become more valuable. If a company discovers that its largest competitor is raising salaries by 8% for all employees in a certain job category, that means a 4% salary increase is no longer enough. Employers will often adjust their salary offers during the year if that's what it takes to keep the right people with the skills they're looking for.
With the shortage of talent and the “Great Resignation” of recent years, companies are worried about retaining the best performers. If you are good at your job and your skills are in demand, your company doesn't want you to quit. You have the option of going and getting hired by another company or organization, and your boss knows it.
What this means for your salary increase in 2024: Smart employers are constantly trying to think ahead to retain the right people – so their best employees are happy with the company and work hard. Retention bonuses and off-cycle salary increases could be part of your salary increase in 2024.
Don't assume that you don't deserve a bigger pay raise or that your employer can't afford to pay you more. Even amid global economic uncertainty, many employers are planning significant salary increases in 2024. Your manager and your organization may value you more than you think. And right now, with a strong job market, employees have more power than they think. Don't give this power away. Have a cordial and open conversation with your boss. Ask for what you deserve, stand up for yourself, and show how you add value and exceed expectations. You'll be more likely to get a big pay raise – and more money in your bank account – in 2024.
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