USA Today asks a very troubling question: “Is the annual pay raise dead?” When clients ask me about the job market, I tell them that the problem isn’t jobs. It’s getting paid. Wage increases have ticked up at about 2%, which for most people is not enough to cover increased costs. Bob Sullivan of CNBC, the author of the USA Today article, cites an expert from AON Hewitt, who said, “Base salary increases are flat. We don't see the prospect of that changing much at all in the next several years.” Rather than annual salary increases, many companies are turning to bonuses as a way to reward productive employees while better controlling labor costs.
The article goes on to state that employee turnover is high and “critical-skill” employees are hardest to retain. Go figure. Why should employees be loyal to companies that only care about the bottom line? They are following market forces just as their employers are. I agree with an expert quoted at the end of the article who urges workers to know and refine their most marketable skills. But I’ll take it one step further: Rather than hope that your current employer rewards you with a bonus, always be ready to find a better employer if your compensation is not fair or if a better option is available. Treat your career like a business.
Is it fair that workers are producing more wealth for their employer and not seeing a share of that wealth? Writing in Daily Kos, Meteor Blades reports on some alarming data from the Department of Labor. Productivity is increasing at an annual rate of 3% while labor costs are down and wages are stagnant. Blades does a great job of historical analysis, showing that wages began to contract long before the “Great Recession” of 2008.
This sad story is another reason why workers need to be in a constant job search. If your current employer is asking for more and not rewarding you, it’s time to test the market. For many workers, that will be the only way to get a significant raise.