- The economy is in tip-top shape, but companies are still hesitant to give raises.
- Promotions without raises are becoming more common, according to new research by staffing firm OfficeTeam.
- In 2011, 22% of HR managers said their company gives new titles without a raise. Now, 39% do.
Your boss asks you for a meeting. You’re excited and a bit nervous – you’ve been doing good work, getting nods from important people, and your numbers are higher than ever.
“We’ve loved the work you’ve been doing this year,” your boss tells you once you’re sitting down. “And we would love to offer you the new role of…”
Your good mood is suddenly curbed, though. You have a new title and new responsibilities, but there’s a crucial point missing: A raise. It’s extra stress and time at the office without the financial benefit.
Promotions without raises are becoming more common, according to new research by staffing firm OfficeTeam. In 2011, 22% of HR managers said their company gives new titles without a raise. Now, 39% do.
Their employees are becoming more accustomed to the practice as well. In 2018, 64% of workers said they would accept a higher title without the raise – compared to 55% seven years ago. Men (72%) and workers under 34 (also 72%) are more likely to accept a promotion in title without a pay raise than workers older than 55 (53%) and women (55%).
This is one of many recent studies that indicate a reluctance for employers to boost their employees’ pay.
A Mercer survey of about 1,500 mid-sized-to-large companies found that salary increase budgets have remained the same since 2015. And while 72% of companies will enjoy tax savings from December’s Tax Cuts & Jobs Act, just 4% are directing some of those savings into their salary increase budgets.
It bodes worse for hourly workers. They’re actually earning slightly less this year than they were last year, according to the Bureau of Labor Statistics.
So, why are companies so hesistant to boost salaries?
It’s a complicated question, with a few different possible answers.
One theory is that the Great Recession produced a disproportionate amount of low-wage jobs, and that has driven down wage growth from a macro perspective.
“For many technology companies, there’s a bifurcated workforce. You have your drivers and your software engineers; your factory workers and product managers,” Jukay Hsu, CEO of the coding academy C4Q, told CBS News.
And on the white collar side, the lack of salary boosts might be closely tied to the new bumps in perks and benefits. That includes health insurance and transit subsidies, as well as cushier perks like free meals or more paid time off. Signing bonuses and stock options also don’t play into government salary data.
Regardless of the reasons, workers are taking matters into their own hands by finding new jobs.
People are voluntarily quitting their jobs at the highest rate in 17 years, The Wall Street Journal reported in July. And job switchers are earning 48% higher annual pay increases this year than those who stay in their jobs.
“A husband and wife can easily quit their jobs and both find good opportunities in jobs they want, where they want to live,” University of Chicago economist Steven Davis told the Journal.