This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Salaries Nudge Upward Again Next Year

NEW YORK (TheStreet) -- Economists watch pay rate adjustments at U.S. companies closely, as the adjustments hint at the health of the economy.

So the annual payroll outlook from WorldatWork deserves a close look from economists and from employees, and this year’s outlook is in positive territory, with the forecast showing the average worker paycheck for 2015 rising by 3.1%.

With this year's numbers showed payroll numbers rising by 3%, the report continues a five-year run-up in payroll budgets after 2009’s all-time low of 2.2%.

It's good for payroll budget numbers to stay well ahead of the rate of inflation and its threat to consumer spending, and right now the inflation rate stands at 2.1% -- so U.S. workers are seeing paychecks stay ahead of inflation, albeit barely.

Read More: Here's What Our Minimum Wage Nation Looks Like

The reasons companies beef up employees’ paychecks can change too. It’s not all about keeping employees happy and in place, although those are big issues too. The real issues are more about the overall economy.

"Salary increase budgets will likely remain close to the 3% mark until market forces require employers to raise wages more aggressively," says Alison Avalos, research manager for WorldatWork. "Recovering from the recession is no longer driving employers’ salary budget planning. Current salary budget increase amounts are less about a recovery from widespread pay freezes from a few years back and more about the current marketplace not demanding much growth in the size of pay increases for employees." 

Other takeaways from the WorldatWork study include:

  • 90% of companies usually increase payroll budgets by between 2% and 4%. Only between 2% and 4% of companies cut their payroll budgets.

Read More: Bring Up Salary At Job Interview? Managers Expect It

  • Eight major U.S. cities reported declines in payroll budgets from 2013 to this year: Detroit, Miami, Minneapolis, Pittsburgh, Portland, Ore., San Diego, St. Louis and Tampa, Fla.
  • Three cities (two of them in California, where the cost of living is higher), report payroll budgets above 3.1%: Houston, Los Angeles and San Francisco.

Companies are getting creative with their compensation strategies. "Organizations know that in order to retain top talent, they need to reward and motivate these important employees," Avalos says. "They are doing so by differentiating salary increases and increasing the use of bonus programs."

According to WorldatWork, 74% of companies are using performance programs to allocate higher pay. In addition, hiring bonuses, spot bonuses and project completion bonuses are all on the upswing.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs