July 15, 2008 / 3:59 PM / in 9 years

U.S., Canadian workers can expect pay hikes: survey

BOSTON (Reuters) - Even as companies in the auto, airline and financial sectors slash jobs in the face of a slowing economy, most U.S. and Canadian workers who escape the cost-cutting ax can expect their paychecks to get a little fatter next year.

<p>A man is seen using a saw in this file photo. Employers in Canada and the U.S. expect to increase their pay budgets by 3.9 percent in 2009, in line with this year's increase, according to a preliminary study released on July 15, 2008 by WorldatWork. REUTERS</p>

Employers in those countries expect to increase their pay budgets by 3.9 percent in 2009, in line with this year’s increase, according to a preliminary study released on Tuesday by WorldatWork, a trade association for human resources professionals.

The survey found that, on average, 91 percent of employees can expect raises this year, with high performers seeing their pay rise 5 percent or more and below-average workers getting 2 percent or less. Very few companies plan no raises at all.

“There was a lot of skepticism as to how the economy was going to effect what employers are able to do financially with their employees,” said Alison Avalos, compensation practice leader at the Scottsdale, Arizona-based group. She added that workers can take heart in the belief that “for average and good performance, they can expect a fairly consistent pay increase to what they’ve seen in recent years.”

The increase is roughly in line with what employers have planned through this decade. Average pay increases hit their lowest rate in the survey’s 35-year history in 2003 and 2004, when employers held raises to an average of 3.6 percent.


The news comes during what has so far been a grim summer for workers in many sectors.

Ailing U.S. automaker General Motors Corp said on Tuesday it would seek to cut its white-collar employment costs about 20 percent by cutting thousands of managerial jobs. It joined airlines including United Airlines, a unit of UAL Corp , and mortgage lender IndyMac Bancorp Inc, which has been seized by regulators, in shedding workers.

Investors and economists have become increasingly concerned about rising inflation rates in the United States, as energy and food prices spiral higher. Gasoline alone is up about 34 percent over the past year to $4.11 per gallon on July 11, according to the nationwide Lundberg Survey.

In that environment, the forecast 3.9 percent raises represent no fresh inflationary threat, one economist said.

“I wouldn’t see that as a huge additional red flag as far as inflation is concerned,” said Michael Goodman, director of economic and public policy at the University of Massachusetts’ Donahue Institute.

“For workers and households, it’s not a real wage increase at all,” said Goodman. “To the extent that wages are not keeping up with the inflation that consumers face at the gas pump and the grocery story, it’s maybe going to help relieve some pressure on those fronts, but it’s not going to lead to rampant additional spending.”

The survey of more than 2,700 organizations with 13.6 million workers was conducted in April. The full report is to be released next month.

Editing by Gerald E. McCormick

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