NEW YORK (CNN/Money) - Don't bank on a much fatter paycheck next year.
For the third year in a row pay raises are projected to average less than 4 percent, according to a survey of more than 1,700 U.S. employers released Wednesday by Mercer Human Resource Consulting.
Pay increases will average 3.5 percent in 2004, up from 3.3 percent in 2003, the survey found. For the eight years prior to 2002, pay raises averaged between 4.1 percent and 4.4 percent. The 2004 average includes the fact that some workers will get no increase whatsoever due to a salary freeze.
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And among those workers who will receive raises, some groups will receive more than others. Executives in 2004 should see average raises of 3.7 percent , managers and technical or professional employees 3.6 percent, nonexempt clerical workers 3.5 percent and nonunion hourly workers 3.4 percent, Mercer reported.
"In the current environment, employers are less concerned with 'chasing the market' in terms of pay. Today, they are more internally focused on what they afford. They can do this because the balance of labor supply and demand has tilted in their favor, at least temporarily," said Steven E. Gross, a Mercer compensation consulting leader, in a press release.
With small budgets for raises, some may not even get the short end of the stick. "In order to give their outstanding employees a 5 percent-plus raise, employers may need to consider giving no pay increase at all to employees with sub-par performance," Gross noted.
While projected pay raises may not knock your socks off, your wallet does have one thing going for it: low inflation. The Conference Board projects an inflation rate of 2.7 percent for 2004, about a percentage point below Mercer's projected pay hikes. That's better than some years, such as 1975, 1978 through 1980, and 1990, when inflation outpaced the average pay hike, according to data from the Conference Board.
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