Just as they have for the past three years, employers plan to give most workers an average raise of 3 percent next year, according to a new report by Willis Towers Watson. Raises for executives will average 3.1 percent in 2018, a bit less than what they have received over the past two years.
Employees who receive the best reviews will collect an average 4.5 percent increase in salary, while workers with sub-par ratings will receive a 1 percent salary bump.
“Most companies are not under any significant pressure to increase their salary budgets in the near term,” Laura Sejen, a managing director at Willis Towers Watson, said in a statement. “Companies are relying more on variable pay, such as annual incentives and discretionary bonuses, to recognize their best performers.”
Still, the study forecasted that annual performance bonuses would hold steady or decline this year. Professional employees are in line to receive annual performance bonuses worth an average 10.5 percent of their salary, about the same as last year.
Even as unemployment has fallen, hitting 4.3 percent in July, wage growth since the Great Recession remains largely stalled. Average hourly pay increased 2.5 percent in July, a full percentage point lower than what economists expect when the unemployment rate is this low.
Despite the overall stagnation, there has been some wage growth among workers at the lowest income level, as employers contend with a shortage of workers in industries like health care and construction.