Overall US Salary Hikes Same in 2006 as 2005

February 15, 2006 (PLANSPONSOR.com) - Salaries across the US are expected to rise as much in 2006 as they did last year, according to a new survey.

According to a news release, the Salary.com survey showed total pay raises at 3.7% nationally, matching reported increases during the prior year. Additionally, 55% of human resource managers reported that their 2006 budget for salary increases will be the same as it was in 2005.

Expectations for 2006 salary increases are categorized in the survey by the three components of a total pay raise:

  • general increase/cost of living adjustment: an across-the-board wage and salary increase designed to bring pay in line with increases in the cost of living
  • merit increase: an adjustment to an individual’s base pay rate based on performance
  • equity/market adjustment: the percentage increase to organization, group or individual pay that is necessary to adjust it to the estimated market level.

Nationally, the 2005/2006 National Salary Budget Survey shows general increase adjustments are expected to be between 1% and 1.2% of overall pay, depending on job level. This is slightly down from 2005, where general increase adjustments ranged from 1% to 1.4% of overall pay.

However, merit increases show a slight bump in 2006, at 3.3% to 3.5% of overall pay, depending on job level. This is up from 3.2% to 3.4% in 2005. The survey also shows a downward trend in equity/market adjustment salary increases, which are expected to range from 0.8% to 0.9% in 2006, down from 0.9% to 1% in 2005.

Other survey results included, according to the news release:

  • Non-promotional salary increases were prevalent in 2005 with 75% of respondents indicating that they received a raise without a promotion.
  • While the overall manufacturing sector is projecting roughly the same increases as in 2005, increases in the wood, paper, and petroleum-manufacturing sector are expected to be 0.5% to 1% higher than 2005 levels.
  • Increases for the middle southeast and the lower southeast sub-regions are projected to be slightly higher than in 2005, but the impact of the year’s hurricanes may affect these projections.

The survey was conducted between August and October 2005. A total of 528 organizations participated, ranging in size from fewer than 100 full-time employees to more than 200,000 workers.

To download a copy of the survey results, go to http://www.salary.com/ourdata/layoutscripts/datl_research.asp . A free registration is required.