You may not get as big a raise in 2024 as you did this year, if early predictions from economists and employers hold up.
Employers on average are budgeting smaller salary increases in 2024 compared to this year, surveys show, while online job aggregators such as ZipRecruiter, Indeed and Glassdoor are forecasting a sharper slowdown in posted wage growth.
"By all expectations, the mood for [wage growth in] 2024 is radically different than what it was going into 2023," said Aaron Terrazas, Glassdoor's chief economist.
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This shift comes as most Americans' wages are still barely keeping pace with inflation, which has been cooling as the labor market tightens from continuous rate hikes, experts said. Worries about a possible recession have also renewed.
What kind of pay increases workers may see in 2024
Employer compensation budgets remain high compared to before the pandemic. That's still true for 2024 — even if figures are smaller than this year as the economic environment evolves.
In June, employers surveyed by consulting firm WTW said they were planning to increase salaries by about 4% in 2024, compared to 4.6% in 2023. A Mercer survey in September found that organizations were forecasting a 3.9% increase in overall compensation budgets, compared to 4.1% in 2023.
"We're not there yet, but I think we are seeing it shift a bit" to an employer market, where workers have less power to demand higher pay, said LaCinda Glover, a senior principal consultant at Mercer. "If we see more cooling [in the job market], those budget numbers will come down a bit."
Wage growth has 'come down pretty steadily'
Employees are entering a tighter job market, which has affected wage predictions, said Terrazas. A recent Glassdoor report noted that the rates of employees quitting or entering jobs has returned to pre-pandemic levels.
"We should expect less turnover to continue to tamp down wage growth in coming months," according to the report.
Career site Indeed, like other groups, has already been monitoring a slowdown across sectors. At the current rate, Indeed's tracker forecasts posted wage growth to reach the 2019 average of 3.1% in late 2023 or early 2024. It found that posted wages grew 4.5% year over year in August — compared to 9.3% in January 2022.
Wage growth has "come down pretty steadily" since that pandemic high, Indeed economist Cory Stahle said.
Indeed's tracker precedes government-released data on wages by looking at what employees are actually posting in their job descriptions.
What pay raises mean stacked against inflation
Workers seeking salaries that will match the ongoing rise in the cost of living are likely to find 2024 a challenging environment.
"The average American has only kept pace with inflation, and maybe feels like they've lost ground relative to the pre-pandemic trend," said Julia Pollak, chief economist at ZipRecruiter.
The data supports that: Growth in the consumer price index surpassed wage growth for full-time workers in 2021 and has not come down since, up 18.2% since the beginning of 2020.
As a result, employees on average are continuing to see negative nominal wage gains, Terrazas said. This creates a perception gap between income and the cost of daily goods, allowing "friction and resentment" to build up and push people to leave their job for another opportunity.
With more conservative salary budgets forecasted, inflation will continue to be salient and contribute to rising frustration among workers, Pollak said.
How job seekers can maximize wage growth
There are a number of steps that job seekers can take to position themselves for wage growth, despite the tightening labor market.
Those on the hunt for a job should acknowledge their "red lines" and only focus on postings that list a salary within that range, Pollak said.
If condensing your search based on your desired salary only turns up postings outside of your current skill set and experience, Pollak said workers ought to focus on polishing needed skills through freelance work, building a portfolio that showcases work relevant to their desired job, and highlighting on their resume what training they already have.
"Employers often just lack information about candidates and are very uncertain and very risk averse about making the wrong hire," Pollak said. "Even small bits of information like a recent certification ... is a great signal to employers that shows that you're capable and you're doing things right now."
Employer demand is still strong in multiple sectors, Indeed's Stahle noted, including jobs that are fully in-office and health-care jobs. Employees should use their bargaining power and be open to negotiating, he said.
"Just because we see wages coming down at home, doesn't mean that an individual worker can't necessarily get a larger raise than average," Stahle said.