Philadelphia-based consulting firm the Hay Group has just released its report on salary planning for 2010. Why is that a big deal? Because it could offer hints as to how much of a raise U.S. employees in several different fields can expect to see in 2011. Their forecast is based on a survey of more than 300 companies from March through June, and they’ll provide a more comprehensive review of the result at the end of July. But this is the first look we’ve gotten at how the compensation picture will look in 2011, and it also suggests, on a bigger scale, the answer to a question on everyone’s mind: how optimistic are employers feeling about the economic outlook for next year?
Unfortunately, the answer appears to be “not very.” That’s not to say that the results are a disaster — the expectation of even a modest salary gain is a positive sign. And modest would be the right word, since Hay found U.S. companies plan to bump salaries about 3 percent in 2011. Across several industries, from retail to industrial to health care to energy to financial services, the numbers seem to be slightly better than those for 2009, which averaged about 2 percent. This year, across all sectors the numbers top off at around 4 percent, but most companies surveyed appear to be planning some increase.
Mike Armstrong of the Philadelphia Inquirer provides some useful perspective on the numbers:
[The planned salary increase] pales next to the 4.5 percent to 5.0 percent increases in base salaries that were common during the early 2000s, according to Hay’s research. If you assume inflation is running at about 2 percent, a 3 percent salary bump results in a real gain of only 1 percent. Still, something is better than nothing, and no increase is exactly what many people got in 2008 in the teeth of the recession…Besides salary freezes, many employers who’d switched into survival mode in the recession suspended matching payments to 401(k) plans, and bonus plans didn’t pay out very well, if at all, because of poor financial performance.
Maybe this new info will mean better things for 2011’s college graduates, since 2010 graduates receiving their diplomas last month didn’t find the best salary news awaiting them:
Starting salary offers to Class of 2010 new college graduates are down, compared to those offered a year ago, according to a new study published by the National Association of Colleges and Employers (NACE). The Winter 2010 issue of NACE’s Salary Survey shows the overall average offer to a bachelor’s degree graduate is $48,351, down 2 percent from the average offer of $49,353 made to Class of 2009 bachelor’s degree graduates.
However, we all know how quickly things can shift in this recession. In fact, Hay itself had to downscale its forecast for 2010 last December, after predicting a 3 percent salary increase in the summer:
The revised number was 2.5 percent, the lowest-planned increase in the last 10 years. (After the consumer price index growth forecast of 1.8 percent was factored in, it looked even worse with a net gain of only .7 percent.) We’ll have to wait to see whether the forecast for 2011 has a similar fate.