2017 Salary Projections and Recruiting

2012     2013     2014     2015     2016
2.7%      2.8%      2.9%      2.8%      3.0%

Signals For Modest Salary Increases

Most economic reports seem to support the projections for continued modest salary increases.  For example, the U.S. economy continues to grow at approximately 2% per year and this low growth rate contributes to restraining increases in compensation.  In addition, many employers are concerned that we may be coming to the end of an extended growth phase and as the result are being cautious regarding salary increases.

Signals For Higher Salary Increases

A conflicting report by The Federal Reserve Bank of Atlanta stated that salaries have increased 3.6% on a year over year basis as of June 2016. The Atlanta Fed noted that starting in October 2015, wage growth has accelerated at the highest rate since January 2009. Also, the U.S. unemployment rate has fallen from a high of 9.5% in June 2009 to 4.9% in June 2016 according to the U.S. Bureau of Labor Statistics (BLS) and a tightening labor market will tend to increase wages. Although a significant component of the reduction in unemployment is due to workers leaving the work force, the change in the unemployment rate is certainly dramatic.

Incentive Pay

Another indication of employer caution as related to compensation, is that companies are increasingly moving from annual salary increases to incentive oriented financial rewards, such as quarterly and annual bonuses, as a way to recognize top performers and reduce overall employee compensation.  Although this approach improves profits and cash flow, it can lead to an increase in the number of problem employees among those who did not receive incentives, which can result in increased employee turn- over. 

Employee Turnover, Retention and Recruiting