Tips for navigating pay raise roller coaster in 2022

The apparent lack of qualified workers has become a well-publicized conundrum during the COVID-19 pandemic. You can’t drive by a retail establishment without seeing a “help wanted” sign in the window. Theories abound about why jobs are going unfilled. It’s common to assume the answer is to offer higher pay rates. Although the variables in the current economic environment are many, pay should definitely be considered. Depending on how your organization has fared over the past two years, however, you may or may not be in a position to raise everyone’s salary. So, how does your organization allocate its finite salary budget most wisely? Start by understanding the market.

Salary market

Employers have reported higher actual increases to their salary budgets in 2021 than were previously predicted. According to a Gallagher USA report titled “Labor Market Inflation Indicators 2021-2022,” the actual increases in salary budgets for the first three quarters of last year averaged 3%, 3.4%, and 4.6% respectively. Most previous research for the year had predicted hikes averaging 3%.

It seems 2022 may continue the trend. The Conference Board conducted its 2021 salary increase budget survey in April 2021 and again in November. The projected salary budget increases went up by almost 1% from April to November. The board now expects salary raise budgets for 2022 will be 3.9%, which would be the highest growth rate since 2008, according to SHRM researcher Stephen Miller.

Indexing pay structures