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Thursday, March 17, 2011

U.S. Employers Planning Largest Pay Raises Since 2008

Large and medium-sized employers are taking off hiring and wage freezes, and planning to grant workers the largest merit increases since the start of the financial crisis, concludes a survey by human resources consultants Towers Watson.

The merit increases are forecast at 3.0 percent for 2011, which may not buy you that new sailboat, but it exceeds last year’s 2.7 percent raises, and is moving in the right direction toward the typical merit gains of 3.5 to 4.0 percent before the financial crisis. (The increases are coming not a moment too soon: for all U.S. workers, real average hourly earnings for all employees fell 0.1 percent from December 2010 to January 2011, seasonally adjusted, says the Bureau of Labor Statistics.)

Importantly, fewer employers feel compelled to freeze wages for 2011 — 13 percent still will hold the line on executive pay, and 12 percent will freeze hourly wages. But in a similar survey last spring, 61 percent of employers said they would freeze wages for the year, so that’s a big improvement.

Firm are not just rewarding their current workers — about 40 percent of the 381 companies in the survey said they planned to add new technical and professional positions, and a quarter expects to add sales pros and hourly workers.

Not that’s not a significant shift from the 66 percent that had hiring freezes a year ago, but notwithstanding loyal reader tsigili’s pithy comment below, it still offers a prospect of job growth. And the Labor Department reported another decrease in initial unemployment claims. Per Bloomberg:
Applications for jobless benefits decreased by 22,000 to 391,000 in the week ended Feb. 19, Labor Department figures showed today. Economists forecast claims would drop to 405,000, according to the median estimate in a Bloomberg News survey. Claims have fallen in three of the past four weeks…

The four-week moving average, a less volatile measure, fell to 402,000 from 418,500 last week, the lowest since 398,750 in July 2008.

Companies may begin to ratchet up hiring after reducing firings, which will bring unemployment down further.

By John Keefe

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