Bob Larson, CPC
Bob Larson, CPC

Survey Says Pay & Hiring Freezes to be Lifted

Many employers are planning to reinstate merit increases and reverse hiring freezes in 2010, but some compensation experts say base salaries are unlikely to return to pre-recession levels anytime soon, if ever, according to an article in The Wall Street Journal.

Of 555 large U.S. employers polled in October by Hewitt Associates, the human resource consulting and outsourcing firm, 83 percent said they will give out raises next year, while only about half did so in 2009. None anticipate pay reductions next year, after 10 percent cut salaries in 2009, according to data collected.

Companies will raise salaries in 2010 by an average of 2.5 percent, the second-lowest level on record since this year, when salaries dipped to 1.8 percent, the survey showed. In 2002, companies raised salaries an average 3.6 percent, then the lowest level on record, which was down from 4.3 percent in 2001, Hewitt reported.

“We’re going to be living in the upper 2 percent and lower 3 percent neighborhood for a very long time,” Ken Abosch, the North American compensation practice leader for Hewitt, told the newspaper. “Companies have fought very hard to bring their cost structure under control and they’re not going to easily allow cost to creep back.”

But Peter Cappelli, a professor of management for the Wharton School at the University of Pennsylvania, said salaries could return to or possibly even exceed pre-recession levels if and when the labor market tightens again. “It’s just supply and demand,” he said.

One other variable to consider, added Cappelli, is inflation. “If it stays really low, wage increases will stay really low. If it rises, so will nominal wage increases,” he said.

Another survey, from global consulting firm Watson Wyatt Worldwide Inc., indicated that employers expect to give merit increases in 2010 averaging 2.8 percent, according to the article. Polled in October, respondents included 201 mostly large U.S. companies; 54 percent said they plan to end salary freezes in the next six months.

Abosch said he recommends that employers allocate the majority of their budgets toward their top talent. “Companies should be doing everything they can to try to retain their high-performers and their high potential,” he added.

The Watson Wyatt survey also revealed that almost half of companies polled plan to reverse hiring freezes in the next six months, according to the article. Additionally, almost all respondents said they’ve made offers to new hires in the past three months, and 93 percent anticipate making offers by January 2010.

Since survey respondents indicated that many firms plan to lift hiring freezes, Abosch added, “we know there’s going to be some movement.” Plus, he said, anecdotal evidence supports his theory. “I’ve had a lot of my clients tell me they’re already starting to see talent leave their organizations.”

Laura Sejen, practice director, strategic awards for Watson Wyatt, expects most employers to reward their best people with the biggest raises in 2010, in part because that’s what they’ve always done.

“We know from our ongoing research that top performers tend to receive increases that are close to two times that of the average performer,” Sejen told the newspaper. What’s more, current market conditions render the strategy critical, she said. “Since there wasn’t much money to go around in 2009, in 2010, you can expect employers to focus on delivering larger pay increases to their top performers.”

The article also pointed out that recruits brought in to fill vacancies created by layoffs, in most cases, shouldn’t expect to receive salary offers greater than what those positions previously paid. “There’s been downward pressure on wages as a result of the recession,” said Sejen. “Salaries then for new hires are likely to be fairly flat relative to prior years.”

Temporary Help Services Roundup

We at Berman Larson Kane have seen an increase in Professional Contract & Temporary Staffing over the past few months. Our micro trend is confirmed by the figures below that come from the US Employment Situation (November 2009) presented by Bruce Steinberg.

“The stabilization of temporary help services jobs first seen in the BLS data last month for the past few months does not seem like an aberration. Temporary Help Services were up 52,400 to 1,862,100, but the good news doesn’t stop there. Since July 2009, which appears to be its recent low point, Temporary Help Services has added almost 117,000 jobs or is up 6.7 percent. And more good news — Temporary Help Services continued to gain market share, which is percentage of all jobs, and was 1.42 percent in November that is a level is hasn’t experienced since February.”

To read the full report, follow this link

News from BLK

Berman Larson Kane is pleased to be celebrating the One Year Anniversary of bringing FREE Job-seeker Webinars to those in transition.

“Thanks to the tens of thousands that have participated in the Berman Larson Kane webinar program and for all of the feedback and success stories that have been shared. My wish for 2010 is that all participants become successful “webinar dropouts” because they become prosperously employed.” Bob Larson