Raises Are 25% Smaller Than Last Year and Fewer Are Getting Them

A new study by BambooHR, the leading cloud-based HR platform, reveals a concerning decline in worker compensation across the US. Examining the sentiment of 1,500 adults, the study found that 41% of salaried employees did not receive raises in the past year, a significant increase from 33% in 2022. Moreover, those who did receive raises saw a 25% reduction in their pay increase, highlighting the undeniable impact of the current economic climate on employee earnings.

“While an uncertain job market might be keeping employees at a company, it’s clear that morale is low,” said Anita Grantham, Head of HR at BambooHR. “For the second year in a row, our study uncovered that employees feel they aren’t getting paid enough. It’s crucial for employers to understand these trends to focus on next steps to improve employee engagement and overall retention.”

Salary Dissatisfaction
Although only 21% of salaried workers changed employers in the last year compared to 34% in 2022 (a 38% decrease), 73% of employees admitted they would consider leaving their current job for a higher paycheck. It would take a 13.3% pay increase to tempt an employee away from their current position, down from 16.1% in 2022.

  • 27% of women expressed frustration with their compensation (up from 16% in 2022) compared to 15% of men (up from 11% in 2022).
  • 58% of employees are content or happy with their current financial compensation.
  • Almost half (48%) have thought about leaving their company in the last six months to find better compensation, up from 41% who felt the same way in 2022.

Salary Transparency
With transparency laws enacted nationwide, 82% of employees now consider salary transparency essential when evaluating potential employers, up from 69% in 2022. Younger generations are also talking more candidly about pay with peers. Employers need to make clear decisions about pay philosophies and transparency levels—sharing can be equally disruptive if leaders aren’t prepared to discuss it clearly.

  • Salary transparency means a host of different things to employees:
    • 59% of employees believe salary transparency means clearly communicating the complete compensation package to everyone.
    • 50% view salary transparency as the disclosure of salary ranges for every role within the company.
    • 32% of employees believe that true salary transparency involves disclosing the exact salary for each role, not just a salary range, leaving no room for ambiguity or speculation.
  • And when it comes to salaries, younger generations are more likely to be transparent, and as Baby Boomers begin to retire, this trend will only become more prevalent in the workplace:
    • 76% of Gen Z employees have disclosed their salary to a coworker, compared to 60% of Millennials, 39% of Gen X, and 30% of Boomers.
    • 69% of employees feel comfortable discussing their salary with a coworker, with 52% having already engaged in such conversations
      • 45% have discussed salary with a coworker in the last year.

Benefits and Remote Work
While salary remains a key element of total compensation strategy, benefits are a critical component of the employee experience. And, when it comes to how benefits are applied to in-person workers vs. remote or hybrid workers, the opinions become even more complex.

  • 56% of employees report that their employers have introduced new or improved benefits, while 28% say their benefits have been removed or reduced.
  • Half of employees believe employers who fail to provide essential benefits should compensate their workers more, up from 45% in 2022.
  • 32% of respondents believe in-office workers should be paid more than remote or hybrid workers, while only 6% think the opposite.
    • 62% believe both types of workers should be paid equally for the same work.
  • Interestingly, there are some gender differences in these opinions. 36% of men think in-office workers should be paid more, compared to 28% of women. On the other hand, 67% of women believe both should be paid equally, compared to 56% of men.

To read the full report on employee sentiment around benefits and compensation or tips for people managers, visit: https://www.bamboohr.com/resources/guides/compensation-trends 

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