Economic Downturn Hits Compensation Plans | Raises few and far between in 2009
Even with the expensive holiday season approaching, most workers should probably avoid borrowing against the raises they anticipate getting next year.
Two recent national surveys suggest employers are bracing for continued economic hard times with plans for lower raises and smaller bonuses than they’ve given out in some time.
Hewitt Associates, an Illinois-based human resources firm, talked to more than 400 large employers and found that 42 percent of them plan to “revise” their pay and bonuses in 2009. Among companies making a change, pay raises will drop by 1 percent, down to 3.1 percent. Hewitt said that’s the lowest planned salary increase that employers have reported since after 9/11.
Meanwhile, a survey by another huge HR company, Watson Wyatt, found that 4 percent of the 248 companies it talked to have frozen pay rates entirely, and 12 percent plan to do so in the next year. Three percent said they’ve actually reduced employee salaries already, and 4 percent said they plan to do so.
Slim To Nothing
In Central Massachusetts, it’s a similar story.
With many businesses in a holding pattern or worse, they just can’t help their employees deal with the increasing cost of living, said Karen DeMichele, president of Savvy Staffing Solutions in Worcester.
“We’re hearing no raises to 2 percent across the board,” she said. “It’s startling. It’s just like people are saying, ‘How can we give people raises when we haven’t made money and we’re losing money?’”
Jo-An Gladstone, president of Selectstaff in Framingham and Worcester, said she’s seeing the same thing from the employers she works with.
“Right now they’re doing what they can to maintain the people they can and not accrue any more costs,” she said.
Gladstone said announcements of major layoffs at many large companies, like the ones at Boston-based Fidelity Investments, have repercussions far beyond the individual corporations’ walls.
“People in that industry are not going to see huge raises,” she said.
DeMichele said the shift is even more striking with companies that have made layoffs in the past year and have now recovered enough to hire new people. Many of these companies are now offering less money for a given position but adding more requirements, she said, and that’s true for jobs across industries and job descriptions. Manufacturers are asking for five to seven years, rather than two years, of experience for their line workers, and companies hiring executives are looking for a stronger work history and more longevity with previous employers.
And even for low-wage jobs, DeMichele said the increase in the state’s minimum wage hasn’t made much of a difference. Massachusetts raised the minimum wage from $6.75 in 2006 to $8 at the start of 2008.
“People that were making $8 before are still making $8,” she said. “Companies are able to get people that are willing to take that because it’s something. Unemployment has run out and something is better than nothing.”
At Appleseed Personnel in Leominster, President Maedon Coburn said she isn’t getting many complaints from people she’s placed at local companies, but she doesn’t know whether that’s because they’ve gotten decent raises or because they’ve decided to settle for a situation that’s less than ideal.
As for the price tag on the new openings she’s been filling, Coburn said there’s been little change for more than a year. That’s par for the course for her manufacturing clients, she said, but it’s unusual for clerical jobs.
“The jobs are certainly still there,” she said, “but I have not seen a lot of increase in pay for the jobs.”
For Gladstone, the outlook is even less optimistic.
“A lot of people now are concerned more about their jobs than getting a raise,” she said.
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