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January 27, 2010
Base Salary Increases Dropped Below 3 Percent in 2009

In a BLR webinar entitled "Where's My Raise? How to Handle Tough Pay Conversations With Employees," Theresa Murphy of HR Partner Advantage and David Wudkyka of Westminster Associates addressed the fact that base salary increases dropped below 3 percent in 2009 for the first time since Hewitt began tracking such data in 1976. Nearly half (48 percent) of the surveyed employers froze salaries, up considerably from 2 percent the previous year. Specifically :

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  • Base salary increases for salaried exempt employees will average 2.7 percent in 2010. Salaried non-exempt employees will see an increase of 2.6 percent. Nonunion hourly and union workers will receive 2.7 percent raises on average. And, executive employees will see 2.6 percent increases.
  • In advance of 2010, 13 percent of survey companies were already planning salary freezes (and, among those employers, more than two thirds of them also had a freeze in place). "Even during past economic downturns, we have not seen such dismal salary increases as we did this year -- it truly is unprecedented," said Ken Abosch, leader of Hewitt Associates' North American Broad-Based Compensation Consulting business.

Theresa Murphy is the principal consultant for HR Partner Advantage, an independent human resources advisory firm based in Raleigh, N.C. She may be contacted at tmurphy@hrpartneradvantage.com. David Wudyka is the founder and managing principal of Westminster Associates, a Massachusetts-based human resource and compensation firm that specializes in pay, performance and productivity issues. He may be contacted at dwudyka@westminsterassociates.com .

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