Majority of US companies anticipate raising wages in 2023

Fighting an uphill battle to attract and retain talent in an increasingly competitive labor market, companies are planning on boosting salary budgets in 2023, according to the Salary Budget Planning Report from Willis Towers Watson (WTW).

The WTW survey found that nearly two-thirds of respondents said that they are budgeting pay raises next year and that salary budgets will see an “overall average increase of 4.1% for 2023.” This follows a 4% salary budget increase in 2022. While that is the biggest increase since 2008, according to WTW, inflation across the world is still outpacing the 2022 wage boost.

“Compounding economic conditions and new ways of working are leading organizations to continually reassess their salary budgets to remain competitive,” said Hatti Johansson, global product development and innovation leader at WTW, in a statement. “With such a dynamic environment, it’s imperative for organizations not only to have a clear compensation strategy but also a keen understanding and appreciation of the factors that influence compensation growth.”

Labor challenges are almost universal, according to the survey, with 94% of respondents saying that they are having trouble attracting talent this year. However, only 40% said they expected the same talent challenges next year.

Companies are also moving beyond compensation. Many organizations are increasing workplace flexibility and boosting DE&I efforts to attract and retain talent.

“With a possible recession looming, continued high inflation, and employers grappling with talent supply challenges, organizations need to get more creative to address attraction and retention challenges,” Catherine Hartmann, managing director of work, rewards, and careers at WTW, said in a statement.

The survey was conducted in spring 2022, and featured 22,570 responses from companies in 168 countries.—DA