With Inflation and Uncertainty on the Rise, Employers are Increasing Salary Budgets
Nov 23, 2022
A recent XpertHR survey found that over 80% of companies are increasing salary budgets to draw in the workforce.
New York City (November 23, 2022) – Between rising turnover, a smaller workforce and soaring inflation, employers are doing everything they can to secure their employees—including raising salary budgets for 2023.
Top takeaways from the XpertHR Salary Budgets 2023 Survey include:
– 83% of responding companies reported that their salary budget will increase in 2023.
– Over 60% of surveyed companies are planning on increasing salary budgets by 4% or more, a dramatic increase from 45% of surveyed companies in 2022.
– Salaries for workers are projected to increase by 4%, while officer and executive wages will have a lesser increase of 3%.
In its analysis of nearly 350 U.S. employers, XpertHR found that 83% of responding companies reported that their salary budget will increase in 2023. Over 60% of companies plan on increasing salary budgets by 4% or more, a drastic increase from 45% of companies that planned to increase salary budgets by 4% or more in 2022. This increase may be due to mounting pressures—XpertHR also found that 80% of responding companies felt more pressure to increase their salary budget this year than there was last year.
Over 60% of companies will increase salary budgets by 4% or more, while 13% will raise salary budgets by over 8%.
81% identified inflation and cost of living as a substantial salary budget pressure.
The reason is due to the unique state of the labor market. The survey found that 81% of companies saw inflation and cost of living as one of the top salary budget pressure points, followed closely by industry salaries (79%), recruitment and retention (78%), operating costs (68%) and financial performance (67%).
Most companies know that inflation pressure and stress are weighing more on exempt and non-exempt workers than officers and executives. The survey found that worker salaries are projected to increase by 4%—an 0.8% climb from 2021. Meanwhile, wages for officers and executives are projected to have a lesser increase of 0.5%, from 3.5% to 3%.
“The smartest move for most employers is to increase salary budgets for 2023, especially in light of this year’s high turnover rate,” says Victoria Kelleher, Lead Survey Specialist at XpertHR. “Employers need to stay competitive, especially with a high cost of living—the “Great Reshuffle” has proven that employees can and will find jobs elsewhere if salaries don’t suit their needs.”
Exempt and non-exempt workers are projected to see their salaries increase to 4%, while officers and executives are projected to see a smaller increase of 3%.
While inflation and cost of living, industry salaries and recruitment and retention were the most indicated pressures, employers also felt the economy (66%), organizational salaries (57%) and, interestingly enough, pay equity efforts (56%) were other considerable upward pressures.
“We found that pay equity was moderately correlated with both salaries in the industry and within the organization, with no significant correlations between the other pressures,” says Kelleher. “This may suggest companies are using industry-wide data to inform pay equity initiatives, rather than just their own internal data.”
XpertHR’s 2023 Salary Budget Survey was conducted from September 14 to October 4, 2022. The survey included responses from 346 U.S. employers of various industries and workforce sizes. The survey report captures up-to-date projections for 2023 salary changes to assist employers in their salary budget decisions in the coming months, as well as the unique challenges employers are facing in their budget decisions this year, 2023 plans for bonuses, and compensation policies for remote workers.A complimentary press version of the report is available upon request.
XpertHR has been providing HR solutions since 2002, empowering organizations across the globe to build successful workforces and create a purposeful workplace for all. The platform delivers expert insight, trusted resources, data analysis and practical tools to help achieve greater efficiency, reduce risk, and increase employee engagement. XpertHR is developing smarter data analysis tools and cutting-edge technology to support future demands on HR in an increasingly digital world. To learn more, visit xperthr.com.