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Here’s some data to dampen the holiday spirit. Salary growth has declined for the second year in a row, half of employees are under financial stress, and the pay gap for women is expanding, according to a survey released Thursday by software platform BambooHR.
The average annual salary increase fell to 3.6% this year from 4.6% in 2023 and 6.2% in 2022, based on the responses of 1,512 people Bamboo surveyed in September. That’s not counting the two in five salaried respondents who didn’t receive a pay increase at all.
Then there’s the widening gender pay gap. “Over the last few years, men have consistently reported receiving higher salary increases than women,” the report said, including this year, when the average raise for men was 4.8% to women’s 2.7%, the latter barely more than the 2.4% inflation rate in September, when the survey was taken. A smaller share of women even got a raise: 55% compared to 64% of men. No surprise, then, that more women reported being unhappy with their pay.
Respondents weren’t happy about the raises they were getting, either. Shrinking raises (among those getting them) were accompanied by a declining share of people who are happy with their compensation: 72% “fe[lt] positive emotions when describing their current financial compensation,” the report said, compared with 83% in 2022.
They’ll walk. That matters because more employees are open to leaving their jobs, for a smaller potential raise, than in the last couple of years. Surveyors found 77% of employees “would consider” putting in their two weeks’ notice for a job with better pay, compared to 73% in 2022 and 2023. The average raise it would take for them to switch, which was 16.1% in 2022 and 13.3% last year, is now just 12.5%. Little wonder when 50% of employees said they’re “currently struggling to make ends meet due to rising costs.”
Recommendations. Employers can offer employees more through adding cost-of-living increases to pay and boosting benefits “such as flexible work options or additional paid time off,” according to the report. They should make compensation reviews a regular thing and follow marketplace trends to make sure they’re offering competitive compensation.
Employers should also be more open with employees about how compensation is set. Give employees a chance to express their feelings about compensation, including through surveys and encouraging conversations about salary—and listen to them.