June 23, 2004 -- A prevailing sense of caution in the business community has resulted in salary increase budgets across America remaining virtually the same as last year, The Conference Board reports today.
“Although U.S. business continues to rebound from the economic downturn, companies are still paying close attention to cost control,” says Charles Peck, The Conference Board’s compensation specialist. “This continued caution is reflected in the pattern of 2004 salary increase budgets compared with last year’s projections.” For all industries as a group, actual 2004 salary budgets are averaging 3.5 percent, virtually identical to last year’s projections. This was true for all three employee groups: nonexempt, exempt and executive.
For all but one of the individual industry groups, actual 2004 budgets were equal to, or slightly less than, projected. The exception was the insurance industry, which had forecasted 4 percent for all employee groups. The actual 2004 budgets fell markedly below this (between 3.5 percent and 3.7 percent).
This year is the second time in 11 years (the first time was last year) that median increases have fallen significantly below 4 percent. Next year will continue this trend, according to 2005 projections.
“Fortunately, inflation is remaining below salary increase budgets,” adds Peck. The Conference Board currently projects a 2.2 percent rise in inflation for 2004 compared with a 3.5 percent average salary budget for both 2004 and 2005. The 2.7 percent inflation increase projected for 2005 narrows the differential somewhat.
Median salary structure adjustments dropped below the traditional 3 percent increase for the first time in 2003 – 2004 and 2005 continue this pattern. Salary structure adjustment is the movement, up or down, of pay ranges for the hierarchy of jobs established by organizations.
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