How much of a pay raise are you expecting next year?
U.S. employers are planning to give pay raises averaging 3% next year, about par with the 2.9% average raise in 2014 and 2013, according to a survey of nearly 1,100 U.S. companies out Monday by compensation consultant Towers Watson.
Inflation is currently running at about 2.1%.
"Your average employee is barely keeping ahead of inflation,'' says Towers Watson managing director Laury Sejen. "It's a little bit disappointing."
Top performers who received the highest performance ratings received 4.5% raises this year, while average-rated workers got a 2.6% boost.
A broader international Towers Watson study found that companies are falling short of pay and incentive programs and are not differentiating pay for top performers as much as they have been in recent years. And among more than 32,000 employees who participated in the survey, just 50% believe they were as fairly compensated as their peers, and just 40% seek clear links between pay and performance.
"Employees believe that employers are falling short in how pay decisions are made, and that there is much need for improvement,'' Sejen says.
As the labor market heats up, soft salary increases could spur more turnover.
"Base pay is the No. 1 reason why employees join a company or choose to leave,'' Sejen says. "So there's value in companies making the effort to improve base pay."
The median annual salary among the nation's 106.6 million workers is now about $40,560, according to the Bureau of Labor Statistics.