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For more than 20 years, annual salary increases have failed to move much more than 3% up or down per year. But new research from executive compensation consultant Pearl Meyer says 2022 is expected to see a significant spike in base pay as inflation has skyrocketed and companies continue to struggle to attract and retain employees after the Great Resignation of 2021.
According to Pearl Meyer’s survey of nearly 340 companies (179 publicly traded and 51 not-for-profit organizations), nearly all respondents said they plan on handing out base-salary raises this year, to the tune of just more than 4%. Fifty percent said they expected their 2022 salary increases will be higher than they projected just months ago. Twelve percent said they expected those increases to be “significantly higher” than they had previously planned. Only 3% of respondents said they expected this year’s annual pay raises to be lower than projected.
The average expected increase was highest among private companies, at 4.8%. Public companies’ raises topped out at 4%, but the study’s authors note that publicly traded firms also have more avenues for increasing total compensation than their privately held counterparts.
“Total increases for publicly traded companies are more modest than private companies, likely because public firms may utilize other vehicles to reward employees including more widespread equity programs,” the authors wrote in the executive summary.