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Employees take hit as pay raises dip

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TESS VIGELAND: As if all the layoff announcements weren’t enough, those employees left to do all the work will likely receive lower pay raises than in years past. That’s according to a survey of 640 large employers by HR management company Hewitt Associates.

Marketplace’s Mitchell Hartman reports merit raises will be the lowest in more than 30 years — assuming you get one at all.

MITCHELL HARTMAN: Back in July, these companies were projecting wage increases of almost 4 percent. Now, that’s down to just 3 percent. More than 1 in 10 workers won’t get any raise at all.

Ken Abosch runs Hewitt’s compensation practice. He says a lot of people have already been taken off the books. Now it’s time to trim pay.

KEN ABOSCH: A lot of companies feel like they’ve already been there and have done as much cutting as they can afford right now in terms of head count. And what they’d rather do actually is to hold onto the talent as best they can, and to manage their costs by reducing these salary increases instead.

Now, you might think employers would take this opportunity to cut back on employee benefits like health insurance, as well as salaries. Turns out, it’s not so easy. Premiums, deductibles and the like were set way back in the spring.

But when new plans are negotiated for 2010, the rise in out-of-pocket costs — like co-pays and deductibles — will continue, says Paul Fronstin of the Employee Benefit Research Institute.

PAUL FRONSTIN: Especially among workers in small businesses, we’re now getting to the point where a $1,000 deductible is becoming common.

Fronstin says premiums will also keep rising for employers and employees.

I’m Mitchell Hartman for Marketplace.

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