Salary Outlook Brightens-Slightly-in 2013

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Many American workers can expect gains in compensation in 2013, although wage growth continues to make slow strides in the post-recession economy.

U.S. employees should see median base salary increases of 3 percent in 2013, according to global consultant Hay Group. When an anticipated consumer price growth of 2.2 percent is factored in, workers will see a net gain of 0.8 percent in pay in 2013—an improvement from a net loss of 0.6 percent in 2012.

“It still would not surprise me if increases came in a hair less than 3 percent,” said C.J. Bolster, a Hay Group vice president and national director of U.S. industries. “There are conflicting trends. The economy is slower than we expected, but it hasn’t completely stopped. And companies are worried about demographics and the availability of talent.”

Industrial Sector

The majority of planned salary budgets for 2013 in the industrial sector—which includes manufacturing, a strong job creator in the post-recession recovery so far—are scheduled for increases at or above 3 percent.

“All it will take is a slight increase in production to really increase the demand for industrial jobs,” Bolster said. That could create upward pressure on wages. “My suspicion is, companies are staying in line with hiring and compensation, but they also want to be prepared to move quickly if demand increases.”

Retail Sector

In the retail industry, planned salary budgets are expected to rise by an average of 2.9 percent in 2013 across all job categories, according to Hay Group. While the salary structure—the framework in which salaries are based—is expected to increase significantly for all retail employees in 2013, salaries for 2013 will likely be in limbo until later this year, Bolster said.

“It all comes down to the Christmas season,” he said. “If Christmas sales go as planned, you’ll see higher wages hold.”

Hospital Sector

In the hospital sector, however, salary budget increases are expected to be well below 3 percent for 2013, according to Hay Group’s research. The average planned increase for nursing salaries, for example, is 2.4 percent. And the salary structure for nurses and hospital support staff is expected to decrease by one-half of one percentage point in 2013 compared to 2012.

“Over the past several years, wage growth in health care has been strong,” Bolster said. “This could just be things getting back to the norm. Also, as health care reform truly begins to take effect in 2014, 2015 and 2016, it will impact the operating margins of hospitals. It’s uncertain how it will all play out, but hospital CEOs are very sensitive to long-term costs right now.”

Other Salary Forecasts

Other surveys also call for modest pay increases across all industries for 2013. Human resource consultant Mercer predicts that the average raise in base pay in the United States will be 2.9 percent next year, up slightly from 2.7 percent in 2012. According to Mercer’s 2012/2013 U.S. Compensation Planning Survey, more than 95 percent of organizations are planning to award base salary increases in 2013. The Mercer survey said that the top factor influencing compensation decisions is “the need to retain talent.”

Human resources consulting company Empsight International predicts that merit increase budgets for 2013 will rise at a median of 3 percent, unchanged from 2012. Workplace research group WorldatWork is forecasting a 3 percent average increase for U.S. salaries in 2013, up from 2.8 percent in 2012.

If economic conditions improve, workers could see better paychecks in 2013, Bolster said. “A small uptick in the economy will really create pressure,” he said. “It will have a ripple effect on hiring, and therefore, on compensation.”

Joseph Coombs is a specialist with the Workplace Trends and Forecasting program at SHRM.  To read the original article, please click here.