If it hasn’t become apparent to you yet, 2016 seems to be the year of the pay raise. In the last quarter of 2015, U.S. wages across all industries exceeded expectations by a significant margin, according to Payscale, Inc. In an effort to retain and attract top performers, 83 percent of employers plan to continue increasing compensation for existing employees, while 66 percent will offer higher starting salaries for new employees.
The trend, says Katie Bardaro, lead economist at PayScale, Inc., has been a long time coming. “Our economy has produced a bleak landscape for wages across almost every industry since the recession,” she explains. “It was encouraging to see that U.S. wages exceeded expectations [by the end of 2015] and that real wages showed signs of improvement.”
In Austin, specifically, certain conditions are boosting salaries in interesting ways. As The HT Group Director of Operations Clint Hawkins explains, “Private equity firms are investing in the Austin market aggressively. This is enabling small and lean companies that have landed new funding to pay higher salaries than those of typical boot-strapped startups. This will change the landscape of Austin tech salaries in the short term.”
Certain other industry salaries are rebounding better than others as well. Payscale points out the following notable salary increases by industry:
- Although wages for IT jobs nationwide fell for the first two quarters of 2015, they picked up once again in Q4, finishing ahead at an annual growth of 1.2 percent.
- Wages in other STEM positions also recovered from a major dip in the first half of 2015 with 0.8 percent annual wage growth for engineering jobs and 1.1 percent annual wage growth for science and biotech jobs.
- After experiencing some major fluctuations since 2014 (and certainly since the recession), construction and real estate industry salaries finished 2015 on a modest upswing of 0.8 and 0.9 percent annual growth.
- Perhaps most surprisingly, Mining, Oil and Gas Exploration industry salaries headed into 2016 with a slight increase. As we reported in February, recruiting and staffing remains a top priority for Texas companies in this industry—including paying competitive wages—even as pink slips are handed out.
The Association for Financial Professionals (AFP) reports the stronger economy has helped finance industry salaries see some gains. Specifically, middle management within the finance industry saw an average salary increase of 4.6 percent in the past year, compared with 3.5 percent for executives and 3.4 percent for staff positions.
In fact, with the strong economy in place, hiring and HR managers in every industry will be hard-pressed to find reason not to increase salaries in 2016. Low unemployment means traditionally lower-wage positions like seasonal and temp jobs are also needing to increase wages to stay competitive. Other research points to short-term incentives, like bonuses, are increasing in importance.
“In this environment, bonuses and other types of short-term incentives are playing a larger role in encouraging employee retention, but they can’t carry that burden alone,” says Stephen Miller, CEBS, online editor and manager for the Society for Human Resource Management (SHRM). “Companies need to provide an overall value proposition that’s effectively communicated.”
“With the unemployment rate in central Texas being so low, our clients are playing tug-o-war with the best talent in the market,” Hawkins adds. “We encourage our clients to think creatively in order to gain a competitive advantage when hiring and retaining employees. Salary increases do play a part in this equation.”
If you’re “playing chicken” with current employees—waiting until they ask for a salary increase or other incentives before granting one—you may lose more than you bargained for. While 73 percent of employers consider their employees fairly paid, only 36 percent of employees agree. Furthermore, Payscale research shows less than half of all employees have ever asked for a pay increase. And workers who made less than $60,000 annually were even less likely to ask for more money. At the same time, “better pay” is among the top reasons employees cited when leaving their companies.
Are good employees more likely to quit than ask for a raise (even a meager one)? Are you willing to find out? Let us know if you agree or disagree!
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