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No-Budge Budgets

By Aysha Ashley Househ

C

ompanies aren’t budging on salary budgets. A new survey reveals that with a tight labor market and low unemployment rate organizations aren’t boosting compensation to help retain employees.

Mercer’s “2018/2019 U.S. Compensation Planning Survey” surveyed more than 1,500 mid-size and large U.S. employers. Results show that employers only plan on increasing their salary increase budgets for 2018 by 2.8 percent, and it’s estimated that employers will only increase them by 2.9 percent in 2019. These past five years have seen the percentage drop below Great Recession levels.

“No longer is the U.S. operating with just U.S. resources as their labor,” said Mary Ann Sardone, partner and Mercer’s North America rewards practice leader. “They’re taking advantage of labor sources all around the world, which may not require increasing wages and actually [could] be more cost effective.”

Findings show salary-increase budgets have been flat year after year, even though most companies are concerned about attracting and retaining employees in an environment with high competition and a low unemployment rate. Even following December’s Tax Cuts and Jobs Act, just 4 percent say they are planning to redirect tax savings into their salary increase budget for 2019.

“When we look at these salary increase budgets, everybody is investing in a very similar way instead of taking a more strategic approach and saying, ‘For my human capital, I’m going to invest differently this year. I may break out of the pack and do something different,’ ” Sardone said. “We just aren’t seeing enough of that, which is a little troubling because most companies will talk about their human capital being their top priority. But most companies also see that as just a cost of doing business rather than an investment.”