Pay raises will be bigger - next year

Employers plan to give workers a 3% raise in 2010 after shrinking salary increases in 2009, according to a survey.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Ben Rooney, CNNMoney.com staff writer

301 Moved Permanently

301 Moved Permanently


nginx
Who will benefit most from the Obama administration's proposed financial regulations?
  • Consumers
  • Banks
  • Regulators

NEW YORK (CNNMoney.com) -- Pay raises are expected to rebound next year after being severely stunted by the recession, a new survey showed Wednesday.

Companies are planning median merit increases of 3% for 2010, according to human resources consulting firm Watson Wyatt, which polled 235 large U.S. employers in May.

While that's below the 3.5% raise workers received in both 2008 and 2007, it would be an improvement over the 2% salary increase employers plan to give out this year, Watson Wyatt said.

"This has been a very difficult year for both employers and their workers," said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt, in a statement.

Employers have slashed planned pay raises this year to help manage costs as the economy remains mired in one of the worst downturns since the Great Depression.

The 18-month old recession has also taken a toll on workers. The nation's unemployment rate stands at a 26-year high of 9.5%, and is expected to top 10% by year's end.

While many economists think growth could resume later this year, the labor market is expected to remain depressed for some time. But Sejen said there is some good news on the horizon.

In addition to a rebound in 2010 pay raises, many employers plan to reinstate previously cut raises "as planning for an eventual economic recovery continues," she said.

In addition, fewer companies plan to eliminate pay raises next year.

A separate Watson Wyatt survey showed that only 10% of 900 companies polled are planning no pay raises for workers in 2010, compared with 25% this year.

Increased scrutiny: The survey also showed that companies are giving smaller raises to employees who do not meet performance expectations.

The median merit increase for workers who "partially met expectations" in 2009 is expected to be 0.2%, down from 1.5%in 2008.

"With companies operating on limited budgets, employees can expect their performance on the job to come under increased scrutiny," said Laurie Bienstock, U.S. director of strategic rewards consulting at Watson Wyatt, in a statement.

By reducing or eliminating salary increases for subpar workers, employers will be able to reward their best performers, Bienstock added.

Workers who "exceed expectations" this year will receive a median 3.1% increase, while workers who "far exceed expectations" will receive a 4% increase, according to the survey.

Bonus bummer: Not surprisingly, performance bonuses are expected to be dismal this year.

"Bonuses are certainly a casualty of the recession," Sejen said.

The survey showed that 2009 annual incentive awards are expected to be funded at 75%. That's down from 82% in 2008 and 99% in 2007.

How has President Obama's $787 billion stimulus program affected you or your community? Are you seeing a benefit from the Making Work Pay tax cuts or the additional $25 in unemployment benefits? Are you seeing construction jobs or other stimulus-funded work in your neighborhood? Do you still have a job because of stimulus funds? We want to hear your experiences. E-mail your story to realstories@cnnmoney.comand you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here.  To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Best-loved cars in America These cars and trucks topped J.D. Power's APEAL survey, which measures how much owners like their new vehicles. More
America's most powerful cars A new 'horsepower war' has erupted among U.S. automakers and these are the most potent weapons in their arsenals. More
A sampling of beers being made with traditional Latin flavors A small but growing number of craft breweries are including passion fruit, Mexican cinnamon and other traditional Latin flavors. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.