Average US Pay Increase Projected to Hit 4.6% in 2023

The average US pay increase is expected to hit 4.6% in 2023, according to a recent survey from the Bureau of Labor Statistics. This increase is slightly higher than the 3.2% that was projected in 2019. It is expected to be a result of the current low inflation rate, as well as the tight labor market which is pushing wages up.

Adjusting Salary Ranges

Employers are adjusting their salary ranges to keep up with the changing market conditions. To keep up with the 4.6% increase in average US pay, employers need to make sure their salary ranges remain competitive. To do this, employers should consider making adjustments to their salary ranges every 2-3 years.

This will help them attract and retain more employees.

Employers should also consider giving their employees periodic pay increases throughout the year. This can help ensure that their employees are keeping up with the market and are not falling behind. For example, employers can give their employees a 3-4% raise every year.

Earlier Forecasts

Earlier forecasts predicted that the average US pay increase would be lower than 4.6% for the next few years. The Federal Reserve Bank of Chicago predicted that the average US pay increase would hover around 3.2% for the next few years.

However, this forecast was made before the current low inflation rate and the tight labor market drove wages up. The current low inflation rate means that employers have more money to spend on wages, and the tight labor market means there is an increased demand for workers. As a result, wages are increasing at a faster rate than expected.

Lower Inflation Still Outpacing Pay Gains

Even though inflation is currently lower than expected, it is still outpacing pay gains. This means that wages are not increasing as quickly as inflation. As a result, workers are not seeing the same increases in their paychecks as they would if inflation was not outstripping pay gains.

In addition, employers are not taking into account the cost of living when determining pay increases. This means that workers are not seeing enough of an increase in their paychecks to keep up with the rising cost of living. As a result, workers are still not seeing the same increases in their paychecks as they would if employers were taking the cost of living into account.

Create a Better Salary Structure with Stan McKnight

Stan McKnight Associates is specialized in faculty compensation which includes developing strategies to address equity issues among employees. With over 20 years of experience in Human Resources, we can help you create a salary structure that takes into account the current market conditions. Contact us today to get started.