Research shows that average salary increases are decreasing

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Dive short:

While the average salary increase remained at 4% in 2024, the average increase fell from 4.3% to 3.9%, according to survey results collected by Salary.com from more than 1,000 HR professionals in the US and Canada.
The decline is due to fewer companies handing out higher raises, Salary.com found; only 14% of companies gave pay increases between 5% and 6.9%, compared to 25% of companies in the previous survey. In addition, more companies – 38% in 2024, compared to 25% in 2023 – returned to ‘typical’ salary increases between 3% and 3.9%.
“Last year we noticed that salary increases may be at their peak, even as 4 percent becomes the norm,” said Andy Miller, vice president of compensation consulting at Salary.com. a press release dated October 29. “While 4 percent remained the median in 2024, further analysis suggests a shift is underway.”

Diving insight:

Respondents told Salary.com they expected the trend to continue into 2025.

While it rose and remained elevated in recent years, experts were unsure when the payroll budget increase rate would return to pre-pandemic levels — or if it would happen at all. Last fall, compensation experts wondered whether the average increase of 4% became the new normal, compared to the standard 3%.

While the average increase has remained at 4% this year – a rate that has persisted since 2022 – a decline in average increases suggests that companies are not afraid to move down the slope to pre-pandemic levels of between 3 and 3 .9%. . Salary.com’s data follows WTW’s July findings, which showed employers had a plan in place average salary increase of 3.9% before 2025.

Some employers may be relieved by the salary budget leveling out, but employees still have high expectations in recent years – and HR is feeling the pain. A March pay scale analysis found that despite shifts in the economy, employees still expected competitive pay, and HR cited compensation as their biggest challenge. And more recently, employers told WTW that this was not the case effectively implement their pay programsincluding elements such as recruiting, retaining and rewarding employees for performance.

Despite the broader shift in average pay, some industries saw larger average increases, particularly in construction, education, government and the nonprofit sector. In the catering and transport sectors, on the other hand, average wage increases were below average. Employers are also still navigating pay strategies for remote workers, Salary.com noted.