Employers in the US plan an average pay increase of 3.8% in 2024, with higher increases expected in some states, according to a report by Payscale. The report found that 78% of US organizations expect their salary budgets in 2024 to either increase or stay the same as last year. On the other hand, the percentage of organizations expecting to lower their salary increases rose to 22% looking ahead to 2024 from 9% looking ahead to 2023.
Looking back, actual pay increases for 2023 were 4% on average in 2023, though firms had forecast a 3.8% increase, according to the report.
“Although employers may want to bring salary budgets down after recent wage growth, it is still very much an employees’ labor market with skills shortages persisting in some sectors,” Ruth Thomas, pay equity strategist at Payscale, said in a statement. “When it comes to pay increases, the last few years have indicated that the new normal may be in the 3.5% to 4% range, but that could change if we go into recession.”
For the report, Payscale analyzed data from 1,757 participating employers across the US, Canada, and 14 international locations between May and June.