Compensation is more important than ever as employees continue to grapple with an inflated cost of living and are highly focused on the state of the economy.
The average salary increase for 2024 is about 3.6% while annualized inflation is about 2.4%, leaving half of employees struggling to make ends meet, according to a survey of 1,500 full-time, salaried employees conducted by BambooHR. The study found over half of the US workforce is having a difficult time managing financial obligations, including 60% who are paying off debt equal to 30% of their paycheck. Only 41% of employees feel their current pay is sufficient to sustain their lifestyle.
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That may be because salary increases have been decreasing over the past three years. In 2023, the average salary increase was 4.6%, and in 2022 it was 6.2%. Two in five salaried employees received no increase at all this year, the study found.
Those working in construction had the highest pay increase this year at 5.2% and ranked the highest in job satisfaction, underscoring the connection between financial rewards and workplace morale. Employees in education had salary increases less than half that rate at 2.4%.
Half of employees are satisfied with their salary while one-third are dissatisfied, an increase from last year.
The survey found that the gender pay gap persists and may be expanding. Sixty-four percent of men received a raise this year compared with 55% of women. Men also feel more satisfied with their compensation, according to the report. Half of men surveyed said their current salary meets their lifestyle needs compared with 33% of women who felt the same.
In addition, employees are less satisfied with their compensation as they age. Boomers and Gen X report higher levels of discontent at 36% and 34% respectively, compared to 32% for millennials and only 22% for Gen Z, said the report. BambooHR speculated this may be tied to increasing financial responsibilities as people age.
Meanwhile, younger employees are more willing to change jobs. Millennials are the most active job hunters, with 62% job hunting currently, followed by 54% Gen Z, 48% Gen X, and only 31% of boomers. The challenging job market is holding some employees back from searching for a new job. Nearly a third of Gen Z workers say they are staying put because the job market is a mess.
The C-suite enjoys the best compensation packages and the highest level of satisfaction with their pay. Individual contributors on the other hand are often the lowest paid. This leads to a dynamic where 61% of Americans perceive executives and leadership as out of touch with the financial struggles of typical employees, said BambooHR. The report pointed to an Economic Policy Institute study that found CEO pay based on realized compensation grew by 1,460% from 1878 to 2021, while compensation of the typical worker grew by just 18.1% during the same period.
While salary is a primary factor, non-salary compensation also plays a role in job satisfaction. Eighty-five percent of employees expressed a desire for additional benefits not currently offered by their employers. Although 37% prioritize pay over other benefits, 63% would accept a pay cut for specific perks, including 28% who would trade a salary increase for a four-day work week, and 26% who would trade for more paid time off.
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