For 2023, there are some good news on the workplace compensation front, as a competitive labor market in the United States requires firms to go deeper into the budget to pay employees.
In a new study, salary budgets for U.S. employees are expected to increase in 2023, primarily driven by a labor market with more open positions than people to fill them.
For 2023, businesses in the United States are considering a combined average increase of 4.1 percent, compared to the average actual average increase of 4%, which is the second highest increase since 2008.
Here are a few other suggestions from the WTW report.
Nearly two-thirds (64%) of US employees have budgeted for higher employee pay increases than they paid last year, while 41 percent have increased their budgets since previous projections were made earlier this year.
45% of companies in the United States are sticking with the pay limits they set at the start of the year.
According to WTW, some companies are making frequent salary-increase adjustments. More than one-third (36%) have already increased or planned to increase how often they raise salaries. Among those who have participated in this survey, the vast majority (92%) have or will adjust salaries twice a year.
Nearly half of businesses believe inflation is a major factor in raising wages, while over a quarter of firms are looking to reward employees, owing to the current growth forecast.
Is it better to operate smaller companies and pay higher?
Small businesses are experiencing pressure as the year approaches 2023 due to limited labor, high inflation, and other business challenges. Obviously, they will also pay more for employees next year.
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Small businesses in the United States are adapting to meet current economic challenges, including inflation and labor shortages, according to Brett Sussman, the company's chief marketing officer. Kabbage, an American Express subsidiary that tracks U.S. small businesses' performance. Increasing worker paychecks is a way that individuals can remain competitive in the current labor market.
40% said they are increasing salaries for current employees when Kabbage reviewed small businesses on their own.
The time is come to pay up.
Companies in the United States have apparently reached a point where adding to salaries isn't a luxury, its a necessity.
Employers aren't given the task, according to Ira Wolfe, president of Success Performance Solutions, an employee recruitment firm based in Wind Gap, Pa. If you want butts in seats, you'll have to pay. You'll have to pay more if you want skilled, reliable employees.
This is a job market, and this perfect labor storm was unavoidable, according to Wolfe.
Are the WTW and Kabbage research a sign the US economy is on the mend for 2023? Not quite as swift, according to Wolfe.
As the GDP fell for the previous 12 recessions since World War II, unemployment increased. Compared to the previous 12, unemployment was 6.4 percent.
Consequently, given the current economic downturn, rising inflation, but a low unemployment rate, the United States' gross domestic product and employment are now disconnected.
As demand for skilled workers rises, labor markets will tighten even more, according to Wolfe.
Labor markets are being disrupted. Talent management strategies are required. So, increased pay is merely putting lipstick and Band-Aids on a fragile talent supply chain."
