"BLEAK" RAISES
USA Today reports that pay raises will be "bleak" this year:
Employee pay raises are projected at about 3.6%, according to a September survey of 1,276 companies by human resource consultants Hewitt Associates. Salary increases in 2003 averaged 3.4% and were the smallest in 27 years.
"We would describe the picture as pretty bleak," says Ken Abosch, business leader at Hewitt. "Organizations are doing everything in their power to keep a firm grip on pay expenses."
Similarly, in a poll of more than 1,700 companies, Mercer Human Resource Consulting found average pay hikes in 2004 would be about 3.5%. That marks the third consecutive year that annual pay increases have fallen below 4%.
"The smallest in 27 years." How stupid are these people? Have they never heard of inflation, or the recent lack of same. In an environment where inflation is essentially nonexistent, a 3.5 percent raise is great. But the consultants are somehow nostalgic for the good old days when you'd get a 9 percent raise just to keep up with inflation. (I got a huge real raise out of that one, since a 9 percent cost of living increase was written into a WSJ union contract that didn't count on the Volcker Fed.) I tend to think the CPI is somewhat overstated, because of unmeasured quality improvements, but even taking the figures at face value, any intelligent assessment of raises has to assume that they'll be smaller when inflation is running below 2 percent than when it's running at, say, 5 percent--or, if you go back a generation, much higher.