This year is the second time in 11 years (the
first time was last year) that median increases have fallen
significantly below 4 percent.
A prevailing sense of caution in the business community has resulted in salary
increase budgets across America remaining virtually the same as last year, The
Conference Board reports today.
“Although U.S. business continues to rebound from the economic downturn,
companies are still paying close attention to cost control,” says Charles Peck,
The Conference Board’s compensation specialist. “This continued caution is
reflected in the pattern of 2004 salary increase budgets compared with last
year’s projections." For all industries as a group, actual 2004
salary budgets are averaging 3.5 percent, virtually identical to last year’s
projections. This was true for all three employee groups: nonexempt, exempt and
For all but one of the individual industry groups, actual 2004 budgets were
equal to, or slightly less than, projected. The exception was the insurance
industry, which had forecasted 4 percent for all employee groups. The actual
2004 budgets fell markedly below this (between 3.5 percent and 3.7 percent).
This year is the second time in 11 years (the first time was last year) that
median increases have fallen significantly below 4 percent. Next year will
continue this trend, according to 2005 projections.
“Fortunately, inflation is remaining below salary increase budgets,” adds Peck.
The Conference Board currently projects a 2.2 percent rise in inflation for 2004
compared with a 3.5 percent average salary budget for both 2004 and 2005. The
2.7 percent inflation increase projected for 2005 narrows the differential
Median salary structure adjustments dropped below the traditional 3 percent
increase for the first time in 2003 – 2004 and 2005 continue this pattern. Salary structure adjustment is the movement, up or down, of pay ranges
for the hierarchy of jobs established by organizations.
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