Dive Brief:
- While the median salary increase stayed at 4% in 2024, average increases dropped from 4.3% to 3.9%, according to survey results collected by Salary.com from more than 1,000 HR professionals in the U.S. and Canada.
- The drop is due to fewer companies doling out higher raises, Salary.com found; only 14% of companies gave out raises between 5% and 6.9%, compared with 25% of companies in the previous survey. Additionally, more companies — 38% in 2024, compared to 25% in 2023 — returned to “typical” salary increases in the 3% to 3.9% range.
- “Last year, we noted that salary increases might be at a peak, even with 4 percent becoming the norm,” Andy Miller, vice president of compensation consulting at Salary.com, said in an Oct. 29 news release. “While 4 percent remained the median in 2024, further analysis suggests a shift is happening.”
Dive Insight:
Respondents told Salary.com they expected the trend to continue in 2025.
As it rose and continued to remain high over the past few years, experts weren’t sure when the salary budget increase rate would decline back to pre-pandemic levels — or if it would at all. Last fall, compensation experts questioned whether the median 4% raise was becoming the new normal, up from what had been the standard 3%.
While the median increase did stay at 4% this year — a rate it has been at since 2022 — a drop in average increases suggests that companies aren’t afraid to ride the slope down to pre-pandemic levels in the 3-3.9% range. Salary.com’s data tracks with WTW’s findings from July, which showed employers planned a median salary increase of 3.9% for 2025.
Some employers may be relieved by the leveling out in the salary budget, but workers still have high expectations set by the past few years — and HR is feeling the pain. A Payscale analysis from March found that despite shifts in the economy, employees still expected competitive pay, and HR ranked compensation as their greatest challenge. And more recently, employers told WTW they weren’t delivering effectively on their pay programs, including on elements like recruiting, retention and rewarding employees for performance.
Despite the broader shift in median salary, some industries saw bigger median increases, particularly construction and the education, government and nonprofit sectors. In contrast, hospitality and transportation saw median pay increases below the average. Employers are also still navigating pay strategies for remote employees, Salary.com noted.