COMP NEWS – Compensation for U.S. workers continues to rise, though its pace has slowed, according to a new report by the Bureau of Labor Statistics.

Compensation for U.S. workers picked up again in the second quarter of the year, but at a slightly slower pace, evidence that employers are continuing to remain competitive with pay but that inflation pressures appear to be leveling off.

Workers were paid 1 percent more in the second quarter than the first quarter, the Bureau of Labor Statistics (BLS) reported July 28 in its quarterly Employment Cost Index (ECI). That’s slightly slower from the 1.2 percent climb seen in the first quarter. Wages and salaries increased 1 percent and benefit costs increased 0.9 percent from March 2023.

Employers continue to offer more competitive pay raises in an effort to retain talent, though in those increases have faltered have struggled to keep up with rising costs of living.

Employers have turned to more competitive pay raises for the past couple of years as a result of both high inflation and a tight labor market. Consulting firm Mercer reported earlier this year that U.S. employers reported 2023 annual merit increases have averaged 3.8 percent, while total compensation—which includes merit awards as well as all other types of compensation increases impacting base pay, such as promotional, cost-of-living and minimum wage—increased by 4.1 percent. Seattle-based compensation software firm Payscale reported that 92 percent of organizations gave raises in 2022, while 80 percent plan to do so in 2023.

While the red-hot pace of both inflation and the job market is starting to cool, analysts say that wages will likely continue to remain competitive as employees continue to feel the sting of months of high costs-of-living.

To read more about wage increases in the second quarter of 2023, click here.

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