Next year is shaping up to be another solid one for pay bumps.
Employers say they’re increasing their salary budgets by about 3.5% to 4% on average, according to several recent surveys. The budget increases mark a slight dip from recent pandemic highs but remain above the pre-pandemic norm of 3%.
“Despite a slower pace of hiring and slight increases in unemployment, elevated wages are expected to continue into 2025,” said Dana M. Peterson, chief economist at The Conference Board in a recent statement.
The business think tank surveyed 300 private-sector companies for its latest salary budget report, which was released last week. On average, employers said they plan to increase their salary budgets by 3.9% next year.
Proposed budgets tend to mirror actual increases quite closely in The Conference Board’s surveys. For example, the proposed budget increases for salaries in 2024 were 4.1%, and actual budget increases were 3.8%.
Other recent surveys suggest much the same. A July report from the consulting firm Willis Towers Watson — which surveyed over 1,800 U.S. employers — found that companies are gearing up for a 3.9% increase in their salary budgets next year. Payscale’s findings were slightly more conservative, placing that figure at 3.5%.
All the numbers point to the same trend: Raises in 2025 will likely remain higher than the pre-pandemic average.
Who’s getting the biggest raises next year?
Just because a company is adjusting its salary budgets by, say, 4% does not mean that every worker at the company is going to get a 4% raise. It simply means that the pot of money that the employer is allocating toward pay is getting larger.
How much of a raise you’ll actually get next year — or whether you’ll get one at all — depends on several factors. What industry are you working in? Does your company customarily give out annual raises, cost-of-living adjustments or promotions? Is this a conversation you need to start or is it built into your performance review?
According to The Conference Board survey results, the industries with the largest increases to their salary budgets are communications (4.45%), insurance (4.35%), financial services (4.26%) and energy-agriculture (4.15%). On the other hand, utilities (3.31%) and banking (3.6%) companies have the lowest planned increases.
The survey also provides some clues on how companies plan to use their bigger budgets. The largest share of the money is going toward merit raises for high-performing workers, as opposed to across-the-board raises.
Additionally, about 40% of employers said they’re setting aside money for promotions in 2025, an increase from recent years.
Keep in mind that all of these figures thus far are for workers in the private sector. People who work for the government have completely different processes for raises. For instance, President Joe Biden has the final say on the budget for federal workers. Biden’s current proposal, which needs Congressional approval, includes a 2% raise for federal workers, despite federal unions calling for a pay bump of more than 7%.
How to get the raise you deserve
In many cases, raises don’t come automatically. And if they do, the raise probably is lower than the amount you actually want. Career experts say that you will need to be proactive: Ask for that raise.
“You need to start this conversation,” Tramelle D. Jones, a career coach, previously told Money. “Don’t wait for your boss to come talk to you.”
She recommends compiling concrete examples of your accomplishments since your last raise. Referencing local inflation numbers if they outpace your earnings may be a solid option, too, but Jones says not to make this the crux of your argument since that affects everyone at your company and doesn’t speak to your individual situation. Instead, focus on why you deserve the raise. Show why you deserve the raise.
And be persistent. Set up meetings and follow ups.
“We are talking about money,” Jones said. “It’s not just going to show up out of nowhere.”
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