When asked, only about one-third of those participating in the survey stated they thought there would be a wage boost in their company in the fourth quarter that would be comparable to the wage boost of the second quarter. Why such sluggishness in pay raises?
It all comes down to supply and demand. With so many Americans still unemployed, there’s still a deluge of applicants for open positions, meaning workers are easier to replace and empty jobs easier to fill. This gives companies little incentive to raise salaries and wages for employees. Even if your company doesn’t offer raises, there are still perks you can ask for that might be even better than a raise.
Just how many Americans are out of work right now? There are some 9.3 million people unemployed according to government data. For perspective, there were approximately 7.6 million unemployed prior to the Great Depression. Even amongst the currently employed, it’s not all good news. Currently there are an estimated 7 million Americans are only employed part-time, but who are actively seeking full-time employment.
Large-scale unemployment is not the only factor revealed by the survey. Slow growth, which included falling profit margins in the third quarter, is something else companies are looking at when assessing their bottom line in terms of employee pay. With less profit coming in for companies, there is less to divvy up between employees by way of pay raises.
Expectations for a 2 percent or higher overall gross domestic product (GDP) increase in the coming year is up from the last quarterly survey’s 77 percent to an impressive 85 percent. This is despite the slow growth and stall in pay increases.
Though some companies are experiencing a hiring boon currently due to the approaching holiday season, not all of them will be keeping those seasonal hires on for full-time work. This seasonal hiring bonanza may help the fourth quarter’s numbers, but expectations are still low for consumer confidence, meaning that profit margins may still decline or show little growth. This also means the majority of those seasonal hires will be back in the job market again in a few months, giving employers more reason to keep pay raises at a stall.
(Photo courtesy of Nic McPhee)