Seven Years of Three-Percent Raises

US employees can expect their pay base to increase three percent, on average, in 2018. It’s the seventh straight year of three-percent raises, according to new research by the Hay Group division of Korn Ferry. “I’m not surprised,” says Maryam Morse, North American Rewards and Benefits Leader for Korn Ferry Hay Group. “It reflects our new pay reality that substantial pay growth isn’t a given.”

Both the projected and actual pay increases have remained consistent since the end of the recession, Experts say the trend reflects employers’ consistent, conservative attitude toward base-salary increases.

The only real exception to the three-percent rule are top performers.

But instead of annual across-the-board pay increases, organizations are using short- and long-term incentive plans or financial-recognition programs to reward good work. “The key is for organizations to ensure they are optimizing their reward investment to drive performance and retain their best employees,” Morse says.

The forecast results are based on a survey for 450 US organizations from March through June 2017. Actual pay data is gathered from the same group of respondents and tabulated in July each year.