Salary.com, a leading provider of compensation market data and software, shared the results of its annual National Salary Budget Survey. The survey collected responses from over 1,000 HR professionals across 20 industries in the U.S. and Canada to see how companies are planning salary increases.
This year’s survey finds that the median salary increase stayed at 4%, but average increases dropped from 4.3% to 3.9%. The company says this drop is due to fewer companies giving higher raises. The number of companies giving raises between 5% and 6.9% fell from 25% to 14%. This trend could be linked to lower inflation and stable unemployment after the economic instability caused by the pandemic and the Great Resignation. The survey also shows a return to typical salary increases of 3% to 3.9%, as reported by 38% of respondents in 2024, compared to 25% in 2023. Expectations for 2025 are similar to 2024.
“Last year, we noted that salary increases might be at a peak, even with 4% becoming the norm,” says Andy Miller, vice president of compensation consulting at Salary.com. “While 4% remained the median in 2024, further analysis suggests a shift is happening. This is important for HR and compensation teams as they plan budgets for next year, considering factors like industry, location, and work arrangements.”
Additional findings include the following.
- Geographically, the Northeast U.S. had the lowest salary increases, while the West Coast had the highest. The Northeast averaged 3.6%, compared to the national average of 3.9%. New York City (3.7%) and Boston (3.3%) had lower increases than San Francisco (4%) and Seattle (4.3%).
- Regarding industries, construction (4.2%) and education, government, and nonprofit (4.3%) had the largest increases. Hospitality (3.4%) and transportation (3.6%) had smaller increases. Hospitality continues to adjust to local and regional minimum wage changes while recovering from the pandemic.
- Defining pay for remote employees is still a challenge. The most common approach in 2024 was to set pay based on the employee’s primary residence (29%). Other methods include using a national pay rate (24%), regional pay rates (14%), or the closest employer location (12%). About 14% of respondents do not have remote employees.
“In 2024, many organizations experienced a level-set moment,” says Miller. “Some sectors and regions saw increases, while others saw decreases, matching changes in labor markets, new laws, and evolving situations. Staying on top of these trends is key to good planning.”
