COMP NEWS – U.S. employers are projected to give raises of around 3.5% next year, showing slightly lower growth in most sectors.

U.S. employers are planning for 3.5% raises in 2025, according to Payscale’s most recent salary budget survey.

 

The anticipated salary increase rates vary by industry, Payscale found. On the upper end, government, and engineering and science workers will see raises above 4.5% and 4.2%, respectively. Meanwhile, retail, customer service and education workers can expect raises of just 3.1%, Payscale said.

 

“Given the stabilization of inflation and the easing of labor market conditions, we’re seeing a slight reduction in planned salary increases for 2025, though figures are still above the 3% pre-pandemic baseline that employees have come to expect,” said Ruth Thomas, chief of research and insights at Payscale, in a statement.

Salary increases were 4% in 2023 and 3.6% in 2024.

The projection follows a pattern of “softening in a cooler labor market,” Payscale said. Actual salary increase rates were 4% in 2023 and 3.6% this year.

 

Despite the softening, as Thomas pointed out, pay increase rates remain high in the context of recent history; 2023 was considered a banner year, with firm WTW noting in 2022 that the 4.1% projection at that time was the highest planned increase since 2008.

 

WTW’s projections and actual data vary slightly from Payscale’s and tend to provide higher numbers — with the former projecting a 3.9% increase in 2025 — potentially a result of different employer samples or differences in calculating averages. Both report a similar compensation trend, however.

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