Stable Earnings: Salary Growth Keeps Up with Inflation, Ensuring Steady Income in 2025!
Nicolas BEHBAHANI
Global People Analytics & HR Data Leader - People & Culture | Strategical People Analytics Design
?? Since 2022, data has shown a decline in salary increases and employee satisfaction with compensation.
?? In 2024, 60% of workers received a raise, with an average increase of 3.6%.
?? Salary raises have decreased for the second consecutive year in 2024, dropping by 42% since 2022. Additionally, 40% of workers did not receive a raise last year.
?? Half of employees are currently struggling to make ends meet due to rising costs.
?? As employees progress through different stages of their lives and careers, their expectations and attitudes towards compensation evolve.
?? The C-suite enjoys the best compensation packages and reports the highest levels of satisfaction. In contrast, individual contributors (ICs) are often the lowest-paid and express greater dissatisfaction with their compensation.
?? The gender gap persists, with 64% of men receiving a salary increase in the past year compared to 55% of women. This trend is not new, according to a new interesting research published by BambooHR using data ?? from online survey prepared by Method Research Company and distributed by REPDATA among 1,512 adults (age 18+) in the United States who are full-time salaried employees.
?Decline in Employee Raises and Compensation Satisfaction Persists
Researchers noticed that for the second year in a row, 2 in 5 salaried workers haven't received a salary increase in the last 12 months. For the 60% of employees who did get a raise, the average increase was a modest 3.6%, marking a continued decline from 4.6% in 2023 and 6.2% in 2022—a 42% decrease over two years.
?Employee satisfaction continues to decline annually.
Researchers noticed that a majority of employees rank themselves as satisfied, with half of employees (50%) saying they were at least somewhat satisfied with their most recent salary increase. This is a drop from last year, where 64% of employees were satisfied with their salary increase.
Also researchers highlight that the historical data shows that , over the last few years, men have consistently reported receiving higher salary increases than women, with men receiving 4.9% last year and 6.36% in 2022, while women received 3.5% in 2023 and 5.24% in 2022.
?Generational Disparities in Compensation Satisfaction
Researchers have found that Gen Z, the youngest group in the workforce, has a notably positive view of their compensation, with 79% expressing satisfaction compared to 70% of Millennials, Gen X, and Baby Boomers.
?? Gen Z’s optimism is also linked to their perception of compensation’s impact on mental health, with 45% seeing a direct connection, compared to 44% of Millennials, 30% of Gen X, and only 22% of Baby Boomers. These numbers highlight a growing awareness among younger workers about the mental health implications of financial stability.
?? Conversely, satisfaction with salary increases tends to decline with age. Baby Boomers and Gen X report higher levels of dissatisfaction at 36% and 34% respectively, compared to 32% for Millennials and only 22% for Gen Z.
Researchers conclude that this trend suggests that as employees age and their financial responsibilities increase, their expectations for compensation adjustments rise, potentially leading to greater disappointment when these expectations aren’t met.
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?The Gap between management and employees about compensation
Researchers noted that a majority—61%—of Americans perceive that executives and leadership are out of touch with the financial struggles of typical employees. This perception is exacerbated by the attitudes of senior employees towards money, with 56% of individual contributors feeling irked by senior employees' lack of understanding of what it’s like to live on a typical wage.
?? Finally, researchers have presented comprehensive strategies to empower leaders in effectively supporting their employees.
?? Promote Salary Transparency: Foster an environment where salary discussions are open and encouraged. This transparency helps build trust, ensure equal pay for equal work, and reduce pay discrimination.
?? Implement Clear Policies: Develop and communicate clear policies regarding compensation, especially if there are differentials based on location or role. This clarity can prevent misunderstandings and contribute to a more open company culture.
?? Consider Cost of Living Adjustments: For employees in different geographic locations, consider implementing cost of living adjustments to ensure fairness and employee satisfaction across the board.
?? Enhance Benefits and Compensation Packages: If salary increases aren’t feasible, consider improving the overall compensation package with benefits valued by employees, such as flexible work options or additional paid time off.
?? Establish Regular Compensation Reviews: Conduct regular reviews of compensation packages to ensure they remain competitive and reflect the market standards, employee contributions, and responsibilities.
?? Educate Employees on Compensation Structures: Help employees understand how their compensation is determined, including the differences between merit-based and market-based increases, to minimize potential confusion and dissatisfaction.
?? Monitor Industry Trends: Stay up to date on industry salary trends to ensure that your compensation packages are competitive enough to attract and retain top talent.
?? Address Employee Concerns: Actively listen to and address employee concerns regarding compensation to maintain morale and productivity. For example, conducting regular, anonymous surveys can help employees feel heard.
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This remarkable research has uncovered intriguing patterns regarding pay increases and the necessity for a fair pay transparency policy. Salary has consistently been identified as the top reason employees leave organizations, with studies spanning many years confirming this trend. A significant majority of employees would consider leaving their current positions for higher pay, highlighting the crucial role salary plays in job satisfaction and career decisions. However, the risk of job searching without a financial safety net adds complexity to the decision to leave a job.
Better compensation remains a key motivator for job seekers. Over the past six months, more than half of those actively job hunting have considered leaving their current positions for better pay. Additionally, low pay was a primary reason for many who left their previous jobs.
Pay transparency is increasingly gaining momentum, particularly among Gen Z and Millennials.
Thank you ?? BambooHR researchers team for these insightful findings:
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Human Resource Professional | MBA | Coporate Recruiting Professional- ASA | Ex-Wirtgen Group,A John Deere Company
1 个月Insightful research! The gap between satisfaction levels across roles and generations isn’t just a compensation issue—it’s about perception and inclusivity. Gen Z’s optimism signals a shift in expectations, driven by workplace culture and a stronger focus on purpose and transparency. Thank you for sharing!
Industry Veteran | Exploring Future of Work | Great Manager’s Coach & Mentor
1 个月?? Need to think differently, Nicolas BEHBAHANI. ?? The aftermath of COVID-19 & spending on suboptimal interventions is fueling inflation in many economies. For instance, in India, the government's reduced infrastructure spending last year led to decreased cash circulation & a Q2 GDP drop to 5.4% from 8.1%. ↘? This pressures corporations to rationalize costs. ?? ? In India, many corporations enforce non-disclosure of employees' CTCs, complicating matters. - A challenging scenario indeed. PS: ?? However, the best solution is to educate people on Financial (Wealth) Management, (avoiding moonlighting). ?? Money saved is money earned, especially for youngsters embracing the YOLO (You Only Live Once - One Life) mindset. This approach could address 50% of the challenge.
HR Strategist. Lecturer and International Speaker on HRM and Value Management.
1 个月The UK Governments' policies are likely to stunt growth across the public and private sectors. The increase in Employers National Insurance, Minimum Wage increase (above expectation), the costs associated with the new Employment Rights Legislation and the increase in costs associated with materials, energy etc are all likely to have a negative effect. It is unlikely that the costs can be passed on to customers (who are experiencing increased costs), passing the cost on to employees through lower pay increases will likely result in lower levels of engagement (perhaps even industrial action). This leaves two likely outcomes: reducing staffing levels and/or reducing development. We are already seeing the former with staffing levels, particularly in the retail and leisure sectors, being cut. I have no doubt that this will extend to other sectors. In my view, there will be a need for employers to look closely at how they Manage Human Performance with a view to increasing capability - this would appear to be the only way in which they will harness growth. In short, I don't think that pay transparency will be at the top of the list of priorities in the UK during 2025. Great post Nicolas - it has generated further thought for me.
LinkedIn Top Voices in Company Culture USA & Canada I Executive Advisor | HR Leader (CHRO) | Leadership Coach | Talent Strategy | Change Leadership | Innovation Culture | Healthcare | Higher Education
1 个月Thank you for sharing Nicolas BEHBAHANI
Insightful research, Nicolas BEHBAHANI! The evolving landscape of compensation highlights the critical need for transparency and fairness in salary structures.