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June 29, 2004
Report: Salary Budgets Up 3.5 Percent

On average, employers have increased salary budgets by 3.5 percent for 2004, according to a report by the Conference Board.

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"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 in 2005.

"Fortunately, inflation is remaining below salary increase budgets," says Peck.

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.

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