U.S. Employers ‘Again’ Boosting 2022 Pay Raises, WTW Survey Finds
Fueled by tight labor markets, U.S. employers are boosting their original salary increase projections for 2022 as the Great Resignation shows no signs of abating. That’s according to a new survey by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company.
The survey of 1,004 U.S. companies, conducted during October and November 2021, found nearly one in three respondents (32%) increased their salary increase projections from earlier in the year. Companies are now budgeting an overall average increase of 3.4% in 2022, compared with the average 3.0% increase they had budgeted in June 2021. Companies gave employees an average pay increase of 2.8% in 2021.
2021 increases granted
2022 projected increases (June 2021)
2022 projected increases (Oct./Nov. 2021)
Management and professionals
Production and manual labor
Employees in the following five industries are expected to see the largest salary increases in 2022 compared with their actual increases in 2021:
Retail and wholesale trade: 2.8% to 3.6%
Finance: 2.7% to 3.5%
Life and health insurance: 2.7% to 3.5%
Energy: 2.6% to 3.4%
Industrial manufacturing: 2.6% to 3.4%
“There’s a great reprioritization of work, rewards and careers under way, and it’s putting significant pressure on compensation programs for many employers,” said Catherine Hartmann, North America Rewards practice leader, WTW. “As with their responses to the pandemic, employers are looking to be resilient and adaptable in their approach. For instance, as a result of recognizing that labor shortages, and not inflation, are the primary driver of growing salary budgets, many employers are targeting certain segments such as hourly workers, digital talent and workers with in-demand skills to receive higher pay.”
According to the survey, employer concerns over their ability to hire and retain talent far outweighed other factors for boosting salary increases. Nearly three in four respondents (74%) cited the tight labor market for increasing their budgets from prior projections, while only one-third cited anticipated stronger financial results (34%) and inflation or the rising cost of supplies (31%).
“While companies are boosting salary budgets, bigger pay raises alone won’t be enough to help address their attraction and retention challenges. Supplemental tactics including sign-on bonuses, equity and cash retention, and recognition enhancements plus employee experience drivers such as enhanced career enablement, emphasis on mental wellbeing, focus on DEI [diversity, equity and inclusion], and learning and reskilling opportunities can combine to improve the effectiveness of a compensation program. Winning the talent race will require employers to continue to be creative and comprehensive with their Total Rewards strategy,” said Lesli Jennings, senior director, Work & Rewards, WTW.
About the report
The Salary Budget Planning Report is compiled by WTW’s Data Services practice. The survey was conducted in October and November 2021. Approximately 18,000 sets of responses were received from companies across 130 countries worldwide. A total of 1,004 U.S. employers responded.
The report summarizes the findings of WTW’s annual survey on salary movement and reviews practices as a means of helping companies with their compensation planning for 2022 and beyond.
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.