Midwest Average Pay Hike to be 3.3%

December 19, 2005 (PLANSPONSOR.com) - Midwest area companies say they plan to give employees an average salary increase of 3.3% based primarily on merit, and most anticipate normal staffing levels next year.

A news release from the Stanton Group, a Minneapolis-based employee benefit provider, said that was a conclusion from its 2006 compensation poll. The announcement said that more than 140 companies throughout Minnesota, Iowa, North Dakota, South Dakota and Wisconsin participated.

Although an overwhelming proportion of Minnesota and regional companies are providing base salary increases at or slightly above the revised urban and clerical consumer price index, these hikes tend to come as merit pay rather than across-the-board COLA adjustments. Salaries in other states are expected to rise more slowly than those in the metro areas, the survey showed.

Compared to all other sectors, manufacturing showed a significantly smaller percentage of respondents (18%) expecting to increase salaries at higher rates in 2006, while a like percentage of manufacturers expects to boost pay at a lower than average rate.

Seven in 10 firms say they anticipate normal staffing levels during the next six months, with just under a quarter (23%) saying they plan to add staff in that same timeframe. Manufacturing was the only sector in which respondents forecast a staff cutback. Some 10% of manufacturers said they plan to lay off employees, while one in four manufacturing firms said they expect to add staff.

The survey also showed that businesses continue to face difficulties in recruiting and retaining highly skilled or specialized employees. Nineteen percent of firms are having difficulty attracting and retaining information technology employees, 15% with sales and marketing employees, and 12% with finance employees, most likely due to the demand for staff to work on corporate governance issues such as Sarbanes-Oxley.

For a copy of the 2006 Compensation Planning Survey published by the Stanton Group, contact jjk@lilja.com , or call 952.893.7140.