Yahoo Finance Here’s Just How Big a Raise Workers Can Expect in 2024
Raises have become a hot topic, particularly since the onset of the COVID-19 pandemic.
Find Out: 10 Top Ways To Become Rich by Only Working on Weekends
See: How To Generate Passive Income With Just $500
Costs have risen across the board and workers depend on raises to keep up with the cost of living. Raises have not kept up with the pace of inflation, and next year’s raise may not be much better.
Sponsored: The Results Are In: Is your bank one of the best of the year?
The Labor Market Has Changed In 2023
During 2021 and 2022, many who wanted a salary increase and were denied simply said “I quit” to their employers. This phenomenon of the last few years was known as the Great Resignation, when millions of American workers switched jobs for higher paying ones. Opportunities were more abundant at the time, and workers were willing to job hop for large salary bumps and better opportunities.
Fast forward to today, and the majority of us are reluctant to change jobs. Employers are carefully monitoring the state of the economy and are being more prudent about hiring decisions. In fact, TechCrunch reported that the tech industry alone, including companies such as Google and Meta, has seen a total layoff count at 224,503 year to date.
So, how much of a raise can those of us in existing roles expect in 2024?
Raises in 2024 Will Be Less Than In 2023
Various news outlets have reported that most employers are only planning to increase salaries by an average of 4% in 2024, which is a slight decrease from the average raise in 2023 at about 4.3%. At the same time, inflation is still stubbornly high, housing costs have increased, and everyday living simply costs more. The Federal Reserve Bank of St. Louis indicated that private-sector forecasters expect inflation to fall below 2.5% in 2024. When you factor in this projected inflation rate, although lower than inflation this year, a 4% raise in 2024 doesn’t sound like much.
At the same time, a 4% raise in 2024 will give you the biggest boost in purchasing than raises in 2021 and 2022 did. Inflation eroded pay so much in 2021 and 2022 that the average worker’s buying power decreased all the way down to 2017 levels.
David Turetsky, a vice president of consulting at Salary.com explained, “With inflation being where it’s been over the last two years, it’s been a roller coaster. We might see that some organizations are going to have to put more money back into market adjustments to be able to get their people to where they think they should be.”
How Will Raises Vary Across Industries In 2024?
While 4% will be the average raise for workers in 2024, certain industries will offer higher raises than others. Here are the projected raises by US industry based on a report from Payscale:
Energy and utilities: 4.5%
Engineering and science: 4.4%
Technology: 4.1%
Real estate: 4.0%
Finance and insurance: 4.0%
Government: 4.0%
Nonprofit: 3.9%
Agencies and consultancies: 3.8%
Food, beverage, and hospitality: 3.8%
Construction: 3.7%
Transportation and warehousing: 3.7%
Healthcare and social assistance: 3.5%
Manufacturing: 3.5%
Retail and customer service: 3.5%
Education: 3.4%
The data shows that workers in the energy and utilities, engineering and science, and technology sectors will see raises greater than 4% while workers in manufacturing, retail and customer service, and education will see raises of 3.5% or less.
Why A 4% Raise Is Still Welcome News
Although 4% doesn’t seem like much, it’s still considerable compared with pre-pandemic times. You might be wondering why employers aren’t reverting to the typical 3% annual raise since inflation will decrease next year. Well here are a few reasons:
Unemployment Is At a Five-Year Low: With low unemployment, employers are having to compete for good talent in a tighter labor market. This means paying a competitive wage and offering a higher than necessary raise to employees is necessary for employee retention.
Pay Transparency Laws: Some states, such as Washington and California, have recently passed legislation requiring employers to publish a salary range for every position that they post. Not only do prospective candidates have an edge when comparing jobs, but existing employees will know if their employer is offering them less money than a new hire.
If you’re not getting the raise you want, it’s always worth advocating for yourself and asking directly for the raise you’re looking for. This is especially true if you’re a top performer at a company — an employee that they wouldn’t want to lose.
“Be open and communicative about your needs,” said Turetsky. “Don’t just take what’s given to you.”
With economists predicting a dip in the US economy next year, the best time to ask for a 2024 raise could be right now.
More From GOBankingRates
Grant Cardone Says Passive Income Is the Key To Building Wealth: Here's His No. 1 Way To Get It
Don't Make These Common Mistakes If You Want to Retire Wealthy
This article originally appeared on GOBankingRates.com: Here’s Just How Big a Raise Workers Can Expect in 2024
