Many workers already effectively took a pay cut when wage growth didn't keep up with inflation. They might also get smaller raises in 2024.
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If you were expecting to feel better about your pay check in 2024, think again. Two recent surveys suggest that employers will be making smaller merit-based raises next year.
A survey of US employers by management consulting firm Aon Plc found merit-based raises across all industries are expected to average roughly 3.7% in 2024, down from 3.9% this year, Bloomberg reported.
Those results are in line with those of a survey conducted by HR consulting firm Mercer in August, which found companies are budgeting an average of 3.5% for merit-based raises next year, compared to 3.8% this year.
Promotions might also be harder to come by in 2024.
Respondents to Mercer's survey said they plan on promoting 8.7% of employees and are reserving 1.1% of their salary budgets for that purpose. Those results are down from 2022's survey, when respondents said they planned to promote 10.4% of their employees and earmarked 1.3% of their salary budgets for that purpose. increases.
The projected budget decreases are due to several factors, Mercer found, like company financial performance, economic uncertainty amid recession fears, and turnover easing as elevated quit rates from the Great Resignation stabilize.
Inflation has also begun to come back down from its highs last year, when many workers effectively took a pay cut when their raises weren't enough to beat inflation.
Still, wages aren't expected to catch up to inflation until the fourth quarter of 2024, according to Bankrate.
Though prices are rising at a slower pace than they were a year ago, they're increasing from already-high levels, and wages are starting from behind to catch up.
"The likelihood of Americans fully recovering their purchasing power depends on whether the economy can continue staging this impressive performance and stand strong against these massive headwinds," Bankrate analyst Sarah Foster previously told Insider. "If a recession were to begin at some point next year, joblessness would likely rise, weighing on inflation but wage growth as well."
