Raises are getting smaller, and fewer employees are receiving them

Fewer American workers are receiving raises these days — and those raises are smaller than they used to be. That’s one of the main takeaways from a new study of 1,500 adults examining worker sentiment regarding compensation and benefits.

Released by the cloud-hosted human resources platform BambooHR, the report found that 2 in 5 salaried employees (41%) didn’t receive raises in the past year — up from 33% not receiving raises in 2022. Those who did get raises saw a 25% decrease from previous raise amounts, underscoring the economy’s impact on employee pay in the past year.

“While an uncertain job market might be keeping employees at a company, it’s clear that morale is low,” said Anita Grantham, head of HR at BambooHR. “For the second year in a row, our study uncovered that employees feel they aren’t getting paid enough. It’s crucial for employers to understand these trends to focus on next steps to improve employee engagement and overall retention.”

Raises aren’t the only point of contention among surveyed workers. Here are three other findings from the survey:

• Salary dissatisfaction

Although only 21% of salaried workers changed employers in the past year (compared to 34% in 2022), nearly three-quarters admitted they would consider leaving their current job for a higher paycheck. It would take a 13.3% pay increase to tempt an employee away from a current position, down from 16.1% in 2022.

What’s more, 27% of women expressed frustration with their compensation compared to 15% of men — both up from 2022. Additionally, 48% of all employees have thought about leaving their company in the last six months to find better compensation, compared with 41% who felt the same way in 2022.

• Salary transparency

With transparency laws enacted nationwide, 82% of employees now consider salary transparency essential when evaluating potential employers, up from 69% in 2022. Younger generations also are discussing pay more candidly with peers, according to the survey, prompting researchers to recommend employers “make clear decisions about pay philosophies and transparency levels.”

Salary transparency can mean different things to different employees. For example, 59% of employees believe salary transparency translates to clearly communicating the complete compensation package to everyone, while 50% view salary transparency as the disclosure of salary ranges for every role within the company. Meanwhile, nearly one-third of employees surveyed think that true salary transparency involves disclosing the exact salary for each role — not just a salary range — thus leaving no room for ambiguity or speculation.

• Benefits and remote work

Researchers found that when it comes to how benefits are applied to in-person workers vs. remote or hybrid workers, opinions widely vary. For example, 32% of respondents believe in-office workers should be paid more than remote or hybrid workers, while only 6% think the opposite. And 62% believe both types of workers should be paid equally for the same work.

Opinions differ among genders, too. Among men, 36% think in-office workers should be paid more, compared to 28% of women. On the other hand, 67% of women believe both should be paid equally, compared to 56% of men.

What’s more, half of employees believe employers who fail to provide essential benefits should compensate their workers more, up from 45% in 2022.

Read more: Inflation worries means raises will continue, report finds

The report concludes with a call to action for employers, suggesting they “conduct periodic evaluations of … benefits offerings to ensure they align with employee needs and market trends.” BambooHR also suggests employers consider employee feedback and industry benchmarks to identify areas for improvement.

“This proactive approach will demonstrate your commitment to providing competitive and valuable total compensation,” according to the report.