Wages still don't keep up

A job seeker holds a briefcase as he waits in line to meet with recruiters during the Job Hunter's Boot Camp at College of San Mateo on June 7, 2011 in San Mateo, Calif.

Bob Moon: And that leads us to this: One of those "could-be-worse-but-still-not-exactly-good" stories that we've become so used to. Salaries are expected to go up 2.8 percent on average next year, according to a survey from the HR consulting firm Towers Watson.

That's a whopping two-tenths of a percent tick up from the average pay raises seen over the past two years. It could be a sign that employers are a little more optimistic about the economy. But for workers, no big "woo hoo."

Marketplace's Mitchell Hartman reports.


Mitchell Hartman: Sure, raises are up. But not enough to keep up with prices, says economist Chris Christopher of IHS Global Insight.

Chris Christopher: Inflation has crept up quite a bit, and gasoline is actually retreating, but food prices and non-energy non-food are actually higher than general wage increases for most people.

Laurie Bienstock is with Towers Watson, the firm that did the wage survey. She says raises aren't really intended to help people keep up with the cost of living, anyway. With budgets tight, companies want to reward their highest-performing employees with substantial merit raises that put them ahead of the economic curve -- and leave others behind.

Laurie Bienstock: Highest possible rating we may see an average increase of 4.5 percent, versus below average, 1.5 percent. So, less to play with, but perhaps more of an eye on differentiating to really give to those higher performers.

Some employers are doing well enough to give everybody a boost. The employees at John Maddigan's veterinary clinic in Keizer, Ore., have been getting raises above 5 percent throughout the recession.

John Maddigan: The reason we've been able to do that is we've been continually busier. We've extended our hours, we've gone to late nights on Tuesdays and Thursdays, we're now open on Sundays.

Maddigan says with higher productivity per worker, the practice is bringing in more revenue, while many of his costs -- like insurance and rent -- have barely budged. So now, he's got more profits to pass around.

I'm Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

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