Employers Say Pay Days Looking "Up" in 2001

February 2, 2001 (PLANSPONSOR.com) - Employers are planning higher pay raises for 2001 than they were six months ago, despite a growing number of layoffs and a slowing economy, according to a new survey.

Just 15% of the responding employers anticipate cutting staff levels this year, while 44% predict no change and 41% actually expect to increase headcount in the next 12 months.

Pay Base

Employer respondents expect base salary increases of 4.2% to 4.6% this year, up from the 3.9% to 4.4% anticipated last July in the 2000/2001 US Compensation Planning Survey, conducted by William M. Mercer.

The survey found the following projected 2001 pay increases, by category:

  • Executives – 4.5% increase, versus 4.4% previously
  • Management – 4.5% increase, versus 4.2%
  • Technical/ Professional – up 4.6%, versus 4.2%
  • Nonexempt – up 4.4%, compared with 4.1%
  • Nonunion Hourly – up 4.2%, rather than 3.9% 

In addition, few employers expect short-term incentive payout levels for 2001 to be lower than 2000, according to the survey. In fact, the vast majority of employers say they will increase or hold short-term incentive payout levels even with last year.

“Employers are adopting a ‘wait and see’ attitude regarding the economy,” according to Steven Gross, who leads Mercer’s US compensation consulting practice. “The labor market is still so tight that they are reluctant to take any steps that would make it more difficult to attract and retain good talent. In fact, the survey shows just the opposite – that they are doing more to position themselves positively with current and prospective employees.”

The survey was conducted in December and included 645 firms nationwide.