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🇺🇸 United States /Economy & Trade

Modest pay rises next year could leave some workers behind inflation

From CBS News · () English

Translated from English and summarized by DistantNews. Read the original for the full story.

At a glance

News Named sources Context piece
  • Salary increases at U.S. organizations are projected to average 3.5% in 2027, including merit raises, promotions and cost-of-living adjustments.
  • The forecast could leave some workers barely keeping pace with inflation, which stood at a 3.4% annual rate in July.
  • Employers are increasingly directing larger raises to high performers and priority roles instead of giving similar increases across the workforce.

Workers may see only modest pay gains next year, with average U.S. salary increases projected at 3.5% for 2027. The estimate comes from Marsh, which surveyed 1,000 organizations.

The projection includes merit raises, cost-of-living adjustments, promotions and other increases. Most employers have not finalized their budgets, but Marsh compensation expert Mark Bowling said salary growth has moderated since its 2023 peak and may have settled into a new normal.

2023 was the high-water mark for salary increases, and since then, we've seen them moderate. We may have reached a new normal for what organizations are budgeting for salary increases.

— Mark BowlingThe Marsh compensation expert’s assessment of recent wage-growth trends and employer budgets.

That level of growth could leave some employees barely ahead of inflation. Consumer prices rose 3.4% over the year in July, although economists generally expect inflation to ease this year and in 2027.

They focus on increases where they can have the greatest impact on retention and their business priorities.

— Mark BowlingHis explanation of how companies are allocating limited compensation budgets.

Companies are also having to decide how to distribute limited compensation budgets during continued economic uncertainty. Bowling said employers are focusing increases where they can have the greatest effect on retention and business priorities, rather than spreading them evenly through so-called “peanut-butter” raises.

The approach could produce sharper differences between workers. Marsh projects average increases of 3.8% in high-tech and 3.7% in banking, while employees in sectors such as retail, where job opportunities are declining, could receive raises below inflation. “There are going to be folks who aren't keeping up with inflation,” Bowling said.

There are going to be folks who aren't keeping up with inflation.

— Mark BowlingHis warning that some workers may receive raises below the rate of price growth.
About this summary

Originally published by CBS News in English. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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