October 8, 2020
As Americans dig deep to pay their monthly living costs during a COVID-19 pandemic and an economic downturn, one-third of U.S. companies (35%) now say they have reduced their projections for pay raises next year, relative to their previous estimates; while half are sticking to their original targets, CNN reports.
That’s based on results of a new survey of more than 700 U.S. companies conducted by employment advisory firm Willis Towers Watson.
On average, companies now expect to raise salaries for non-executives by an average of 2.6%, down from the 2.8% they initially projected for all employees. For executives, the estimated hike will be 2.5%. The main reasons cited for the drop: Weaker financial results, cost management, and budget cuts.
By comparison, average annual pay raises for all employees have been about 3% since the Great Recession.
“For many companies, reducing salary budgets, and in some cases, suspending pay raises, was the most viable option, as they balance remaining competitive with maintaining financial stability,” said Catherine Hartmann, the North America Rewards practice leader at Willis Towers Watson, based in Arlington, Virginia.
In terms of bonuses, the good news is two-thirds of employers (66%) are still planning to offer them. But the survey found companies are most likely to pay bonuses to executives and those in management. To help working parents, companies are getting creative
Meanwhile, one-quarter of companies (26%) say they’re still undecided on whether they’ll be able to pay bonuses at all, and nearly one in ten companies (8%) say they won’t do so.
However, CNN opines, other things may matter more in 2021: For those still working, given the stresses that the pandemic has created— particularly for working parents of young children—company benefits that increase flexibility and paid time off may well be perceived by employees to be just as valuable as any paycheck hike or bonus during this unprecedented and difficult chapter.
Research contact: @CNN