One-third of salaried workers haven’t received raises in the past year, according to new study

A new report suggests that, for many workers, salary raises are not keeping pace with inflation. According to a recent study by software provider Bamboo HR, which looked at 1,000 full-time salaried employees in the United States, more than one-third of all salaried workers haven’t gotten a raise within the past year. The same study also shows that salary is highly important to employees’ mental health, and can be a major factor in incentivizing them to stay at an otherwise undesirable job.

“No matter how fulfilling a job is, salary is significant,” says BambooHR head of HR Anita Grantham. “Our study uncovered how employees really feel about compensation and what HR leaders can be doing differently when it comes to salary transparency and total compensation. Understanding these trends has never been so important as employers focus on improving employee engagement and retention.”

Many workers, especially those of younger generations, say that salary is key to their mental wellbeing. More than half of all Millennials and one-third of employees overall say that their incomes impact their mental health. That means high salaries can be a key way to maintain employee retention, with the survey showing that 51% of all respondents would be willing to stay with a job or company they dislike in exchange for a high salary.

Related: Pay raises expected in 2023 amid tight labor market and inflation

But on the other hand, low salaries can cause job dissatisfaction. In BambooHR’s survey, 23% of employees report feeling negatively about their financial compensation. Women are particularly dissatisfied – as many as 1 in 5 are not satisfied with their most recent raise – perhaps partially because they are less likely to receive a salary increase than men within the past year. Those that did receive an increase received a smaller one on average, too – only a 5.24% boost to men’s 6.39% increase.

Still, the report notes that, for companies that can’t afford to raise salaries, there are other perks that can induce workers to accept a lower wage. The data showed many employees were willing to take salary cuts of 7.6% or more for perks like flexible work schedules, more paid time off, and health insurance.