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Study: Small Wage Increases Expected in 2009
The Associated Press reports that a new study from Hewitt Associates found that base pay will climb only by an average of 3.8% in 2009. However, performance-based payments are expected to climb.
A study released Tuesday by Hewitt Associates, a human resources consulting firm, found base pay will rise by 3.8 percent in 2009, marking the seventh consecutive year of flat growth.
One-time performance-based pay, however, is expected to grow by 10.6 percent. That's down slightly from 10.8 percent this year and 11.8 percent in 2007.
Performance-based rewards are popular since they don't commit companies to ongoing costs, said Ken Abosch, leader of Hewitt's compensation consulting business. The survey measured one-time performance-based awards and did not include raises based on performance.
"Most of the compensation growth today comes from (one-time merit-based) pay - it accounts for almost three-quarters of the increase," he said.
Wages have barely been keeping ahead of inflation over the past several years and earlier this year inflation overtook wage increases. A post on a New York Times blog shows that earlier this year wages were not keeping up with inflation for many employees meaning employees were actually taking home less pay.
Posted on September 2, 2008
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Wages Not Keeping Up With Rise in GDP
A CNN article explains how wages are not matching the increase in the GDP for most workers. The article says most workers real wages (wages adjusted for inflation) have been relatively stagnant this decade.
After rising quickly in the second half of the 1990s, most workers real wages have been stagnant in the 2000s, especially since 2003
While productivity jumped almost 20 percent since 2000, the real median hourly wage of all workers rose just 3 percent in the same period. Since 2003, productivity has risen 5 percent, while the median hourly wage fell 1.1 percent.
Women saw a bigger rise in wages between 2000 and 2007, up 4.7 percent. Real median wages for men during the same period were up just 1.1 percent.
Both high school and college workers saw hourly wage gains of about 2.5 percent since 2000.
Yet, in the period between 2003 and 2007, wage gains for median workers, male and female, as well as high school and college workers have all been flat or falling.
A chart on workinglife.org shows you how wages increased very little or decreased from 2000 through 2004. The data in that chart only goes through 2004 but after 2004 things got even worse. You can see another chart in this article. This is really bad news for workers especially when you look at the incredible rise in food and gas over the past few years. Only those wage earners on the very high end of the earnings curve have been seeing much in the way of wage increases. The CNN article also says that real wages for earners in the top 95% have risen 9.4% since 2000 and 5.1% since 2003.
Posted on September 18, 2007
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Employee Bonuses Are Shrinking
An article form the Christian Science Monitor reports on some growing scrooge-like behavior currently taking place in corporate America -- bonuses are shrinking. The Monitor writers, "In many companies, the year-end bonus is becoming a quaint memory of earlier times, when an extra envelope from payroll in December was an almost certain reward for everyone in a firm." That's depressing but this comment from Brian Drum, president of Drum Associates in New York is even worse. "We're seeing the holiday bonuses disappear," says Brian Drum. The article goes on to report that a 2005 survey found 59% of companies do not award a holiday bonus -- but many do offer a performance-based bonus.
In a 2005 survey by Hewitt Associates, 59 percent of companies said they would not award holiday bonuses. But more than three-quarters of firms offer performance-based bonuses that must be reearned each year.
Among 1,500 small businesses, 39 percent plan to give employees holiday bonuses this year, according to Constant Contact, an e-mail marketing service for small businesses. That is up 2 percent from last year.
"For small businesses, cash flow and cash management are more difficult issues," says Gail Goodman, CEO of Constant Contact. "It is harder to see out to the future and understand where cash will be next quarter and next year. It takes more confidence for a small business to pay a bonus."
Whatever a company's size, employees are frustrated by a "lack of clarity about how one qualifies for that bonus," says Bill Kuntz, vice president of Princeton One, an outplacement firm. "They want to be treated fairly and have clear expectations."
If you like bonuses you might want to switch to a career in the financial-services industry. They pay the highest bonuses according to the article. Some companies are also handing out gift cards this year. Another point made in the article is that bonuses are more difficult for smaller companies where the prospect of future earnings is less certain. (via Monster Blog)
Posted on December 11, 2006
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Energy Costs Eat Into Wage Gains
For several years most workers have seen only very small wage increases. This year there have finally been studies showing wage growth. Unfortunately, rising energy costs are now eating into workers' increased pay according to a new study from GLobal Insight Inc.
Authored by Global Insight Inc., the report on annual wage growth prepared for the Conference of Mayors shows the average job in 2005 earned a salary of $43,500 -- a 4.6 percent increase over 2004. The spike in energy costs, however, wiped out almost one-third of those increased earnings.
"We have known for months that families have been feeling the pinch from rising cost of gasoline. Now because of the latest Metro Economy Report, we see that the high cost of gasoline has significantly impacted people's disposable income -- despite recent wage gains. This is concrete proof that our nation needs a comprehensive energy policy that addresses these new economic realities," said Long Beach Mayor Beverly O'Neill, president of the U.S. Conference of Mayors.
Total energy expenditures in the U.S. in 2005 represent 5.9 percent of all consumer spending last year; and energy expenditures in 2005 increased a whopping 20.3 percent over 2004. U.S. households spent $287 billion to fuel cars and trucks, and $225 billion for heating, cooling, and electricity -- an amount equal to 9.0 percent of wages and salaries.
This compares to $230.4 billion spent by U.S. households on gasoline to power cars and trucks, and $195.4 billion spent on other energy costs in 2004 -- an amount equal to 7.9 percent of wages and salaries.
The report also illustrates the effect of rising fuel costs on consumer wage gains in individual cities. For example, the Atlanta metro area had wage increases of $1,740, but saw 45.6 percent of that gain eaten up by gasoline price increases of $792.90. In the Miami metro area, wage gains were $2,109, but gasoline price increases consumed 48.2 percent, or $1,016.10, of the increase. In Detroit, gasoline price increases were 41.7 percent of wage gains, $686 out of $1,646 wage gains. The impact was greatest in Spokane, Wash., where an increase of $549.70 in the price of gasoline ate up 78.2 percent of the area's average wage increase of $761.
Most commuters don't need a study or survye to tell them rising fuel costs are leaving them with less money to spend on what they want. You know it's a difficult economy when you finally start to see wage increases after several years of flat wages and they are quickly erased by rising energy costs and rising inflation.
Posted on May 26, 2006
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Women Earn More Than Men in a Few Fields
A CNNMoney.com article by Jeanne Sahadi includes a list of 39 jobs where women earn more than men. Sales engineers topped the list with the women outearning men by over 40% -- $89,908 to $62,660. Some other jobs where women outearned men by 25% or more include statisticians, legislators, automotive service technicians and mechanics, speech-language pathologists and motion picture projectionists. The list was compiled by Warren Farrell, the author of Why Men Earn More: The Startling Truth Behind the Pay Gap – and What Women Can Do About It. Farrell also gave Sahadi a couple reasons why these particular fields might pay women more than men.
One factor may be scarcity. In fields like engineering, a company may get one woman and seven men applying for a job, Farrell said. If the company wants to hire the woman, they may have to pay a premium to get her.
That's because she may have more competing offers than her male counterparts. The reason: not only is she a top performer who can boost a company's profitability but employing her helps a company improve its equal-opportunity standing, which in turn can help it secure government contracts.
Also, where women can combine technical expertise with people skills – such as those required in sales and other arenas where customers may prefer dealing with a woman - that's likely to contribute to a premium in pay.
"She gives people the best of both worlds," Farrell said.
Obviously, the list of fields where men outearned men would be enormous but it is good to see a few fields where women earn more.
Posted on March 15, 2006
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Just 13% of Employers Plan Cash Bonuses
Workers expecting a holiday bonus this year should not get their hopes up too high. An article on CNN says only 59% of employers plan a holiday bonus and of the 31% of employers giving a bonus only 13% are giving a cash bonus.
Fifty-nine percent of companies say they won't be giving out holiday bonuses in any form this year. And of those that will, only 13 percent said they will be giving out bonuses in cash.
The rest will opt to give food gifts, gift certificates or retailer gift cards, according to a survey released Monday by Hewitt Associates.
Among the companies that said they would be giving cash, the average holiday bonus planned is $683, but the cash bonuses slated range between $25 and $2,500.
Employers said they would spend between $10 and $150 on gift certificates; $10 to $50 for food gifts; and $10 to $100 on retailer gift cards, according to Hewitt's survey.
The article also said that 9% of employers are giving some or all of the money typically allotted as bonus money to charitable organizations which is kind but probably not what hard working employees want to hear.
Posted on November 14, 2005
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New Surveys Crush Hopes for a Raise
If you feel like you need a raise you are not alone. U.S. News reports that salary increase still have not recovered from
the recession and new surveys don't see salary increases in the near future. One depressing study project salaries to barley exceed the rate of inflation.
So, with little slack in the job market, fatter paychecks ought to be close behind, right? Not this time. Salary increases have yet to bounce back in proportion to the strength of the overall market. And two recent surveys indicate that wages will rise only moderately in the coming months. Publishing company BNA's Wage Trend Indicator, which tracks private salaries and wages on a quarterly basis, predicts only a slight rise in third-quarter pay. More disheartening news comes from a recent survey by Mercer Human Resource Consulting, which projects average salaries to exceed inflation by only 1 percent in 2006, less than the 2.4 percent worldwide.
Some employers are also holding vacant positions open longer than normal which also sounds like a bad economic sign. In a good economy they would feel the need to hire to stay competitive with their competitors.
"Companies feel under such cost squeezes that they are looking at other alternatives than raising wages," says Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania's Wharton School. That means holding a vacant position longer, for example, to wait for a more experienced candidate who won't require expensive training, or filling open jobs with less expensive, younger workers.
Posted on October 11, 2005
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