Companies Plan To Give 4% Raises In 1997, 1998 Increase Barely Keeps Workers Ahead Of Current Inflation Rate
A survey of 644 U.S. companies in all major industries indicates that average raises this year and next will be 4 percent.
This is the lowest rate - for the fourth and fifth years in a row - since the Conference Board began surveying salary trends in 1975, and it barely keeps workers ahead of inflation.
The independent business research organization said companies reported raises averaging 4 percent for three categories of workers: executives; salaried exempt employees (those exempt from wage and hour laws governing overtime pay); and nonexempt employees.
The figure holds true for actual 1997 budgets and for projected budgets in 1998.
The survey report noted that inflation is expected to increase by 3.2 percent this year, giving workers a real earnings gain of 0.8 percent.
If inflation increases by 3.7 percent next year, as projected, the real earnings gain for 1998 would shrink to 0.3 percent.
Previously, the survey’s lowest average raise was 4.5 percent in 1993. The inflation rate that year was 3.3 percent, however, so the real earnings gain was 1.2 percent.
Average raises have fallen since the Conference Board survey began in 1975. From 1975 to 1982, annual raises averaged between 7.9 percent and 10.6 percent. In the same period, the annual increase in the consumer price index ranged from 3.9 percent to 13.3 percent.
The biggest average raise - 10.6 percent - came in 1981. Raises averaged 6 percent in 1985 and 1986 and 5 percent from 1987 through 1992. They fell to 4.5 percent in 1993 and have stagnated at 4 percent each year since.