Workers’ wages are rising, but not enough to cancel out or even keep pace with inflation, according to a recent study.
A compensation planning survey of 950 businesses carried out by asset management and consulting firm Mercer found that employers are increasing their budgets for base pay by around 3.2%, while their total compensation budgets, which include items such as merit-based pay increases, are growing by 3.5%.
Both figures represent increases over 2021 compensation growth levels, the report found, but neither keeps pace with the rate of inflation, which as of October stands at 6.2%.
Inflation in the U.S. has now reached a 31-year high, driving up prices for everything from electronics and furniture to food. Economists and researchers attribute the trend to a mismatch between consumer demand — which is soaring — and the ability of companies to get products to buyers, which has been negatively impacted by labor shortages and the supply chain crisis.
Mercer did find a possible silver lining for some workers, however.
Incentive payouts — one-time cash payouts that do not affect base pay — are projected to significantly increase compared to last year, with 1 in 4 employers saying they will have an overall bonus pool more than 10% higher than last year, according to the survey. Nearly half of employers say the bonus pool will be comparable to last year, while only 7% say it will be more than 10% less than last year.