Employers Plan to Increase Salaries 4.1% in 2023, According to Report

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Employers plan to raise salaries 4.1% in 2023, according to Willis Towers Watson’s (WTW) Salary Budget Planning Report. WTW  reported that these budgeted increases will be the largest since 2008 and that nearly 2 in 3 (64%) U.S. employers have budgeted  for higher employee pay raises than last year.

This change comes in response to the continued tight labor market and record-high inflation. According to the Bureau of Labor  Statistics, the U.S. consumer price index (CPI) rose 9.1% year over year in June 2022, the highest year-over-year increase in four  decades. Seventy-three percent of WTW respondents reported the tight labor market is the top factor for increasing wages, while  46% cited employee expectations for higher increases due to inflation.


“Compounding economic conditions and new ways of working are leading  organizations to continually reassess their salary budgets to remain  competitive.” 

- Hatti Johansson, research director of Rewards Data Intelligence, WTW


Inflation and the Workplace 

Inflation is having a direct impact on workers’ lives. Another WTW survey found that 4 in 10 workers live paycheck to paycheck,  and this often applies to even high-salaried workers. For example, full-time faculty members’ wages decreased by 5% in 2022  after adjusting for inflation, according to the American Association of University Professors’ annual report on the economic state  of the profession. Such instances illustrate the challenging environment brought by current inflation for both employers and  employees, leading many organizations to, in turn, increase wages. 

Employers are also going beyond salary increases. Some employers are introducing inflation-offset bonuses while others are  modifying their current compensation programs to require more frequent salary reviews. 



In response to both the tight labor market and continued inflation, employers are raising wages. Employers should continue to  monitor labor, inflation and compensation trends. The employment landscape is ever-changing as workers deal with the realities  of the current economic climate. 

Contact Innovo Benefits Group, LLC for more resources on employee compensation and benefits. 

The content of this News Brief is of general interest and is not intended to apply to specific circumstances. It should not be regarded as legal advice and not be relied upon as such. In relation to any particular  problem which they may have, readers are advised to seek specific advice. © 2022 Zywave, Inc. All rights reserved.
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