On average, employers have increased salary budgets by 3.5 percent for
2004, according to a report by the Conference Board.
"Although U.S. business continues to rebound from the economic downturn,
companies are still paying close attention to cost control," says Charles
Peck, the board's compensation specialist. "This continued caution is reflected
in the pattern of 2004 salary increase budgets compared with last year's projections."
For all but one of the individual industry groups, actual 2004 budgets were
equal to, or slightly less than, projected. The exception was the insurance
industry, which had forecasted 4 percent for all employee groups. The actual
2004 budgets fell markedly below this (between 3.5 percent and 3.7 percent).
If the pattern holds for the rest of 2004, it would mark the second time in
11 years (the first time was last year) that salary increases have fallen significantly
below 4 percent, the board says. The board projects that the trend will continue
"Fortunately, inflation is remaining below salary increase budgets,"
The Conference Board currently projects a 2.2 percent rise in inflation for
2004 and a 3.5 percent average salary-budget increase for both 2004 and 2005.
The 2.7 percent inflation increase projected for 2005 narrows the differential.