COMP NEWS – A new SHRM survey shows that employers are worried about the impact of rising inflation on their organization’s annual pay raises.

Most HR professionals are concerned about the effects of inflation on their organizations, including how inflation will affect annual pay raises for the remainder of 2022, according to new findings from the SHRM Research Institute.

Overall, 73 percent of 1,150 HR professionals surveyed from May 10 to May 24, 2022, indicated that inflation was a concern at their organization, while only 8 percent said it was not a concern.

Pay raises are trailing far behind the rate of inflation, according to the survey.

Labor reported on July 13. Salary and wage increases at U.S. companies, however, have not kept pace with rising prices:

• Average hourly wage growth was 5.1 percent annualized in June, down just a tad from 5.2 percent year over year in May, the Bureau of Labor Statistics (BLS) reported on July 8 in its monthly jobs report.
• Average base pay salary growth increased by an average of 4.8 percent year over year in the second quarter of 2022, according to a survey of more than 300 large employers conducted in May by Pearl Meyer, a compensation advisory firm.

The survey also showed that smaller organizations were more concerned about cost-of-living changes to annual pay increases than larger organizations.

An organization’s size influenced whether it was more likely to consider inflation when setting annual pay raises. Among HR respondents who were aware of their organization’s pay raise plans, those who said that inflation is being considered or accounted for in annual pay raises included:

• 76 percent at small organizations (fewer than 100 employees), including 27 percent who said cost-of-living changes are a standard part of their annual pay adjustments.
• 65 percent at medium organizations (100 to 499 employees), including 29 percent who make annual cost-of-living pay adjustments.
• 54 percent at large organizations (500 or more employees), including 27 percent who make annual cost-of-living pay adjustments.

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