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June
2006 Issue
Conference Board Says Salary Increases Will Stay Below Four Percent for Fourth Consecutive Year
Pay increases for most salaried workers will average only 3.5 percent this year and stay at that level through 2007, The Conference Board reports in its latest annual survey.
For the fourth consecutive year, salary increases are below 4 percent as employers keep the lid on budgets.
“Moderate inflation has allowed employers to continue to control payroll costs,” says Charles Peck, compensation specialist at The Conference Board. “This continued control is reflected in the pattern of salary increase budgets this year compared with last year’s projections.” (See Table 1.) For all industries as a group and for all three employee groups (nonexempt, exempt and executive) 2006 salary budgets are virtually identical to last year’s projections.
Pay increases in diversified financial services and insurance were slightly higher than projected; diversified service was slightly lower.
Estimates for 2007 for all industries and for all employees show salary hikes staying at 3.5 percent with the exception of the executive group, which is projected to move to 3.8 percent. (See Table 2.) This pattern persists in the individual industry sectors with six out of seven projecting higher increases for executives in 2007.
Inflation is projected to be less than median salary budgets in both 2006 and 2007. The Conference Board currently projects a 3.1 percent rise in inflation for 2006 and 3.3 percent for 2007.
Median salary structure adjustments were under 3 percent for the fifth year in a row. (See Table 3.) Salary structure adjustment is the movement, up or down, of pay ranges established by organizations for the hierarchy of jobs.
Source: 2006-2007 Salary Increase Budgets, The Conference Board
Table 1: SALARY INCREASE BUDGETS, 2006 Estimate vs. 2006 Actual
2006 Estimate 2006 Actual
Type of Business Number of Companies* Median Number of Companies* Median
ALL INDUSTRIES
Nonexempt 478 3.5% 428 3.5%
Exempt 485 3.5 439 3.5
Executive 468 3.5 414 3.6
COMMERCIAL BANKING
Nonexempt 20 3.5 23 3.5
Exempt 20 3.5 23 3.5
Executive 20 3.5 23 3.5
DIVERSIFIED FINANCIAL SERVICES
Nonexempt 22 3.6 28 3.7
Exempt 23 3.6 29 3.7
Executive 21 3.6 28 3.7
DIVERSIFIED SERVICES
Nonexempt 59 3.8 43 3.5
Exempt 60 4.0 44 3.5
Executive 60 4.0 43 3.8
INSURANCE
Nonexempt 50 3.7 36 3.8
Exempt 50 3.6 37 3.9
Executive 50 3.7 34 3.8
MANUFACTURING
Nonexempt 222 3.5 208 3.5
Exempt 225 3.5 212 3.5
Executive 214 3.5 198 3.7
TRADE
Nonexempt 47 3.5 41 3.5
Exempt 48 3.5 42 3.5
Executive 48 3.6 41 3.5
UTILITIES
Nonexempt 42 3.5 38 3.5
Exempt 42 3.5 39 3.5
Executive 39 3.5 34 3.5
* Other industry groups are included in totals but not shown separately because of small samples.
Table 2: SALARY INCREASE BUDGETS 2006 and 2007
Number of Companies: 441
2006 Actual Estimated for 2007
Middle 50% Middle 50%
Number of Range Number of Range
Type of Business Companies* Median Low High Companies* Median Low High
ALL INDUSTRIES
Nonexempt 428 3.5% 3.3% 4.0% 392 3.5% 3.5% 4.0%
Exempt 439 3.5 3.3 4.0 401 3.5 3.5 4.0
Executive 414 3.6 3.5 4.0 379 3.8 3.5 4.0
COMMERCIAL BANKING
Nonexempt 23 3.5 3.0 3.8 21 3.5 3.0 4.0
Exempt 23 3.5 3.0 3.8 21 3.5 3.3 4.0
Executive 23 3.5 3.0 3.8 21 3.8 3.0 4.0
DIVERSIFIED FINANCIAL SERVICES
Nonexempt 28 3.7 3.5 4.0 27 4.0 3.5 4.1
Exempt 29 3.7 3.5 4.0 28 3.9 3.5 4.4
Executive 28 3.7 3.5 4.5 27 3.8 3.5 4.5
DIVERSIFIED SERVICES
Nonexempt 43 3.5 3.5 4.0 42 3.6 3.5 4.0
Exempt 44 3.5 3.5 4.0 43 3.5 3.5 4.0
Executive 43 3.8 3.5 4.0 42 3.7 3.5 4.0
INSURANCE
Nonexempt 36 3.8 3.5 4.0 29 3.9 3.5 4.0
Exempt 37 3.9 3.6 4.0 30 3.9 3.5 4.0
Executive 34 3.8 3.5 4.0 28 4.0 3.5 4.0
MANUFACTURING
Nonexempt 208 3.5 3.2 4.0 188 3.5 3.5 4.0
Exempt 212 3.5 3.3 4.0 191 3.7 3.5 4.0
Executive 198 3.7 3.4 4.0 179 3.8 3.5 4.0
TRADE
Nonexempt 41 3.5 3.0 3.7 40 3.5 3.0 4.0
Exempt 42 3.5 3.0 3.8 41 3.5 3.0 3.9
Executive 41 3.5 3.0 4.0 40 3.6 3.1 4.0
UTILITIES
Nonexempt 38 3.5 3.1 3.6 36 3.5 3.5 3.7
Exempt 39 3.5 3.3 3.8 37 3.5 3.5 3.8
Executive 34 3.5 3.5 4.5 32 3.6 3.5 4.5
* Other industry groups are included in totals but not shown separately because of small samples. Data collected April – May 2006.
Table 3: SALARY STRUCTURE ADJUSTMENTS 2006 and 2007
Number of Companies: 441
2006 Actual Estimated for 2007
Middle 50% Middle 50%
Number of Range Number of Range
Type of Business Companies* Median Low High Companies* Median Low High
ALL INDUSTRIES
Nonexempt 377 2.5% 2.0% 3.0% 340 2.7% 2.0% 3.0%
Exempt 378 2.5 2.0 3.0 342 2.7 2.0 3.0
Executive 311 2.5 2.0 3.0 285 2.5 2.0 3.0
COMMERCIAL BANKING
Nonexempt 22 2.3 2.0 3.0 21 2.0 2.0 3.0
Exempt 22 2.5 2.0 3.1 21 2.0 2.0 3.0
Executive 19 2.0 0.0 2.5 18 2.0 1.5 3.0
DIVERSIFIED FINANCIAL SERVICES
Nonexempt 25 2.6 2.0 3.0 23 2.8 2.0 3.0
Exempt 26 2.6 2.0 3.5 24 2.7 2.0 3.5
Executive 23 2.5 2.0 3.0 21 2.5 2.0 3.0
DIVERSIFIED SERVICES
Nonexempt 36 2.5 1.8 3.0 35 2.5 2.0 3.0
Exempt 36 2.8 2.0 3.0 35 2.7 2.0 3.0
Executive 31 2.5 0.0 3.0 30 2.3 0.0 3.0
INSURANCE
Nonexempt 34 2.7 2.2 3.0 28 2.8 2.5 3.0
Exempt 34 2.7 2.4 3.0 28 2.8 2.5 3.0
Executive 29 2.7 2.4 3.0 25 2.8 2.5 3.0
MANUFACTURING
Nonexempt 178 2.5 2.0 3.0 159 2.8 2.0 3.0
Exempt 178 2.7 2.0 3.0 158 2.9 2.0 3.0
Executive 145 2.6 2.0 3.0 132 2.8 2.0 3.0
TRADE
Nonexempt 38 2.5 2.0 2.8 35 2.5 2.0 3.0
Exempt 37 2.5 2.0 2.9 35 2.5 2.0 3.0
Executive 31 2.0 0.0 2.7 29 2.5 2.0 3.0
UTILITIES
Nonexempt 32 2.5 2.0 2.7 30 2.5 2.5 3.0
Exempt 33 2.5 2.0 2.7 31 2.5 2.5 3.0
Executive 22 2.5 2.0 2.7 21 2.5 2.5 2.7
* Other industry groups are included in totals but not shown separately because of small samples. Data collected April – May 2006
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