Benefits February 15, 2006

Overall US Salary Hikes Same in 2006 as 2005

February 15, 2006 (PLANSPONSOR.com) - Salaries across the US are expected to rise as much in 2006 as they did last year, according to a new survey.
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According to a news release, the Salary.com survey showed total pay raises at 3.7% nationally, matching reported increases during the prior year. Additionally, 55% of human resource managers reported that their 2006 budget for salary increases will be the same as it was in 2005.

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Expectations for 2006 salary increases are categorized in the survey by the three components of a total pay raise:

  • general increase/cost of living adjustment: an across-the-board wage and salary increase designed to bring pay in line with increases in the cost of living
  • merit increase: an adjustment to an individual’s base pay rate based on performance
  • equity/market adjustment: the percentage increase to organization, group or individual pay that is necessary to adjust it to the estimated market level.

Nationally, the 2005/2006 National Salary Budget Survey shows general increase adjustments are expected to be between 1% and 1.2% of overall pay, depending on job level. This is slightly down from 2005, where general increase adjustments ranged from 1% to 1.4% of overall pay.

However, merit increases show a slight bump in 2006, at 3.3% to 3.5% of overall pay, depending on job level. This is up from 3.2% to 3.4% in 2005. The survey also shows a downward trend in equity/market adjustment salary increases, which are expected to range from 0.8% to 0.9% in 2006, down from 0.9% to 1% in 2005.

Other survey results included, according to the news release:

  • Non-promotional salary increases were prevalent in 2005 with 75% of respondents indicating that they received a raise without a promotion.
  • While the overall manufacturing sector is projecting roughly the same increases as in 2005, increases in the wood, paper, and petroleum-manufacturing sector are expected to be 0.5% to 1% higher than 2005 levels.
  • Increases for the middle southeast and the lower southeast sub-regions are projected to be slightly higher than in 2005, but the impact of the year’s hurricanes may affect these projections.

The survey was conducted between August and October 2005. A total of 528 organizations participated, ranging in size from fewer than 100 full-time employees to more than 200,000 workers.

To download a copy of the survey results, go to http://www.salary.com/ourdata/layoutscripts/datl_research.asp . A free registration is required.

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